Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Imprisonment of a Member

Mr. Speaker: I have to inform the House that I have received two letters—one from the resident magistrate at Belfast petty sessions and the other from the clerk at the petty sessions in Enniskillen — informing me that Mr. Peter Robinson, the hon. Member for Belfast, East, has been sentenced to a period of imprisonment of seven days.
I shall cause the text of the letters to be published in the Votes and Proceedings and in the Official Report.
Following are the letters:
Dear Mr. Speaker
Peter David Robinson, Member of Parliament for Belfast East, was convicted by me at Belfast Petty Sessions on 11 December 1987, of taking part in a public procession, contrary to Article 3 of the Public Order (Northern Ireland) Order 1987. I fined him £20.00, to be paid within 28 days.
As that fine has not been paid Mr. Robinson was today committed to Prison for a period of 7 days.
Yours faithfully
C. P. McRandal
Resident Magistrate
Dear Sir
At Irvinestown Magistrates Court on Friday 23 October 1987, Mr. David Peter Robinson of 57 Gransha Road, Dundonald, Member of Parliament for Belfast East, was convicted of taking part in a public procession on 27 May 1987 in respect of which the requirements of Article 3 of the Public Order (NI) Order 1987, as to notice had not been satisfied, contrary to Article 3(5)(a) of the said Order. Mr Robinson was fined £20.00 to be paid within 28 days.

On the 27 November 1987 a Warrant of Execution was issued in default of payment. I have just been informed that defendant was lodged in H.M. Prison, Crumlin Road, Belfast on Wednesday 29 January 1988.
Yours faithfully
Signed Clerk of Petty Sessions

Oral Answers to Questions — ENERGY

Energy Conservation

Mr. Knox: To ask the Secretary of State for Energy what recent representations he has received about the adequacy of existing energy conservation schemes.

The Minister of State, Department of Energy (Mr. Peter Morrison): I have received a number of representations. On 22 January I said in reply to my hon. Friend the Member for Berkshire, East (Mr. MacKay) that there would be continuing role for the energy efficiency office, with no change in its budget for 1988–89. I have asked the EEO to target its work at the most economically attractive sectors and to examine how the contribution from industry and commerce can be increased. I am not committed to extending the present level of funding beyond 1988–89.

Mr. Knox: What is my hon. Friend's estimate of the potential for further energy savings? Is he satisfied that the existing schemes will enable us to achieve those savings?

Mr. Morrison: What my right hon. Friend the Secretary of State for Wales and my hon. Friend the Deputy Chief Whip did when they were Secretary of State and Minister with responsibility for this Department was a remarkable success story. They heightened awareness enormously in industry and commerce about the efficient use of energy. Doubtless some firms and managements need to learn a thing or two, and we shall direct our efforts to that matter.

Mr. Barry Jones: I am sure the Minister will agree that British Aerospace has done very well with regard to energy


conservation. May I tell him of one of its worries—the mooted increase in electricity prices? The local factory at Broughton, which is adjacent to his constituency—

Mr. Speaker: Order. Does this have anything to do with energy conservation?

Mr. Jones: Yes, Sir, it is directly related to the matter. British Aerospace at Broughton spends £1 million or more a year on electricity. If the Government increase the price of electricity, the profits of and jobs at British Aerospace in Broughton, which is a factory that the Minister knows well, will be affected. Will the Minister reconsider electricity prices for industry?

Mr. Morrison: As the hon. Gentleman will be aware, I have the honour to be his next door neighbour, with the Broughton factory lying on his side of the constituency. I am particularly well aware of the point that he has made, and I agree that the management and labour force have proved to be outstandingly successful. I have no doubt that the company will continue to make commercial and industrial decisions that will ensure that it remains competitive, which is the best way of ensuring the continuation of the labour force.

Mr. Speaker: Nothing that I have heard leads me to believe that all this has anything to do with energy conservation.

Mr. Butler: As my hon. Friend will be aware, 2 million lofts remain uninsulated and there are 11 million houses without cavity wall insulation. If we were to press ahead with home insulation schemes, would that not, to some degree, save the need for expensive electricity generating capacity?

Mr. Morrison: As my hon. Friend is probably aware, about 300,000 community insulation projects are carried out per year. Some 3 million houses have benefited from the home insulation scheme since the Government came to power, which is an outstandingly good record.

Domestic Consumers

Mr. Simon Hughes: To ask the Secretary of State for Energy if he has any plans to review the code of practice for domestic customers issued by the electrity and gas industries.

Mr. Peter Morrison: No, Sir. It is for the Gas and Electricity Consumer Councils to keep the operation of the code of practice under review and, if appropriate, to recommend any changes.

Mr. Hughes: The Minister will be aware that I am returning to a matter that I raised last month. He accepted the figures that I gave that gas disconnections increased by 40 per cent. last year, whereas electricity disconnections decreased slightly. We have had one cold snap— I am not talking politically — and there may be a severe winter. Will he be less complacent and say that the number of disconnections this winter will be reduced, to prevent thousands dying from or being affected by hypothermia?

Mr. Morrison: I am glad that the hon. Gentleman is not referring to his particular political cold snap. I know that he is concerned about this matter, and I think that at the last Energy Question Time I explained that this is a matter for the Gas Consumer Council. I assure the hon. Gentleman that, under the present code, a commitment

not to cut off the supply between October and March to pensioner households is something that is abided by, and I am sure he will agree with that.

Mr. Stern: Does my hon. Friend agree that as both gas and electricity boards have gained experience of working with the current codes of practice it has been possible for them to look more advantageously at the consumer, as long as the consumer is prepared to contact the gas or electricity boards as early as possible? Indeed, the experience of many of us in our constituency work has been that, provided such negotiations start early enough, many of the problems that the codes of practice were brought into being to prevent are avoidable.

Mr. Morrison: I entirely agree with my hon. Friend. The arrangements in place for both gas and electricity are very welcome to many of his constituents as well as to the constituents of all hon. Members. However, as the hon. Member for Southwark and Bermondsey (Mr. Hughes) pointed out, there has been an increase, and the Gas Consumer Council is looking carefully into this at the moment.

Mr. John Garrett: Is the Minister aware that gas disconnections increased by 25 per cent. in 1986 and by 35 per cent. in the first nine months of 1987? Has not privatisation been a massive and major cause of fuel poverty? What level of disconnections will there be after next April, when the 2.5 million households receiving help for heating through social security will cease to receive it? Is it not a case of putting profit before people?

Mr. Morrison: I do not think that the hon. Gentleman can have noticed what has happened to the price of gas since privatisation. In relative terms the price has gone down, and presumably that will lead to a better situation.

Coal Industry

Mr. Ron Davies: To ask the Secretary of State for Energy how many people are currently eligible for British Coal's redundant mineworkers payments scheme.

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer): By 15 January 7,350 men had accepted redundancy under British Coal's industrial redundancy scheme. There have been no compulsory redundancies.

Mr. Davies: Is the Minister aware that despite the general welcome to extend RMPS to the Tredomen engineering works in my constituency, there is considerable anger at the decision announced a fortnight ago to close the works? Is the Minister further aware that considerable sacrifices were made by the employees at those works over very many years, including the acceptance of voluntary redundancies? In the light of the present closure, will he reconsider his decision not to extend retrospective payments under the RMPS to those former employees?

Mr. Spicer: There will be no change of policy on that matter. The work force at Tredomen has accepted that redundancy closure proposition.

Mr. Andy Stewart: In view of what my hon. Friend has said, would he like to bring a little joy into Arthur Scargill's life, since his disastrous election at the weekend, and let the country know that he would still be eligible for the mineworkers redundancy scheme?

Mr. Spicer: Mr. Scargill was elected on the basis of 35 per cent. of the mining work force. If Mr. Scargill pursues his confrontation policies, far from saving jobs, which he professes is his wish, he will threaten jobs.

Mr. Skinner: Is the Minister aware that the figures announced yesterday for the election of the president of the National Union of Mineworkers, referred to by the hon. Member for Sherwood (Mr. Stewart), showed a handsome majority of which any political leader in Britain would be proud? It is time that we stopped this Orwellian fantasy that, because Arthur Scargill has been elected on a reduced majority, just as the Prime Minister was in the last election, somehow or other he has to adopt the policies of his defeated opponent. That is nonsense.

Mr. Spicer: The hon. Gentleman is right, that Mr. Scargill was re-elected as president of the NUM, although that is only one union representing the miners. I had hoped that the hon. Gentleman would go on to say that if Mr. Scargill's policies are pursued we could end up with more closures in the mining industry, whereas if, for example, the overtime ban were removed, that could lead not only to fewer closures but to the opening up and development of seams and new pits.

Mr. Speaker: May I make a plea for hon. Members to stick to the question. There is a later question about this matter on the Order Paper.

Offshore Supplies Office

Mr. Harry Greenway: To ask the Secretary of State for Energy if he has any proposals to enhance the export support role of the offshore supplies office.

The Secretary of State for Energy (Mr. Cecil Parkinson): The offshore supplies office has recently increased the resources it devotes to supporting the offshore industry in overseas markets. My hon. Friend the Minister of State and I will be doing all we can to support the United Kingdom offshore supplies industry in its bid to win export orders worldwide.

Mr. Greenway: Does my right hon. Friend agree that there are enormous export opportunities in offshore supplies? Will he say what he is doing to assist the process?

Mr. Parkinson: The United Kingdom offshore supplies industry is now a formidable industry employing tens of thousands of people. It supplied nearly £2 billion worth of goods to North sea operators last year. We believe that technology is capable of wide applications in many markets overseas, and my hon. Friend and I will be leading teams of British business men to markets all over the world and supporting them in promoting British exports.

Mr. Dalyell: May I ask the Secretary of State an urgent question affecting the offshore supplies industry in Scotland? How, in what form and when do Ministers propose to use the golden share in Britoil?

Mr. Parkinson: I congratulate the hon. Gentleman on his ingenuity, but I have nothing to add to the remarks of my right hon. Friend the Chancellor of the Exchequer. The golden share exists and it is in the hands of the Treasury Solicitor. The parties bidding for Britoil have been warned that the powers will be used to prevent any of them getting control. When that situation arises, they will be used.

Nuclear Industry

Mr. Matthew Taylor: To ask the Secretary of State for Energy if he will make a statement on the release of information concerning the nuclear industry, in the light of the recent release of documents relating to the 1957 Windscale fire.

Mr. Parkinson: I am sorry; I cannot find the answer immediately.

Mr. Tony Banks: Do not worry. We will talk among ourselves.

Mr. Parkinson: Do. It would help.
The latest release of records included no new information on the causes or effects of the fire that was not already in the public domain. Four White Papers were produced within a year of the fire, and altogether some 70 reports have been published.

Mr. Taylor: Does the Secretary of State accept that there is justified public and scientific concern to see all the papers—if the Secretary of State can find them, that is —and that there is no justification on national security grounds for withholding them? In view of that tragedy, and the tragedy at Chernobyl, will he ensure, not only that all the papers relating to Windscale are released, but that those relating to the proposed test at Trawsfynydd on 12 February are released now? The safety advice given to the Central Electricity Generating Board by the Nuclear Installations Inspectorate should be released and the test called off in the interests of public safety.

Mr. Parkinson: None of the limited number of papers retained deal with the causes or consequences of the Windscale fire. All the information made available on I January had been in the public domain—for those who cared to read it—for a very long time.
On the question of Trawsfynydd, which has very little to do with this question, the proper procedures were being followed to get approval for that test. There was a leak from a source which let the information out early with the intention of causing alarm and concern, but there is no need for alarm or concern.

Mr. Adley: On the question of dangers from energy generation, can my right hon. Friend say now —or will he drop me a note—how many miners have died or had their health destroyed by pneumoconiosis since 1957?

Mr. Parkinson: I do not know the answer to that question, and I am not sure that it is relevant to this question.

Mr. Campbell-Savours: If the remaining documents do not deal with the causes or consequences, will the right hon. Gentleman state what they do deal with in terms of a general heading?

Mr. Parkinson: As the hon. Gentleman knows, successive Governments have followed a policy of not revealing the details of papers that have been retained. He knows that the procedures for having a retention approved are strict. However, I can assure him that nothing relating to either the causes or the consequences of the fire is contained in the retained documents.

Dr. Thomas: In view of the continuing public concern about the safety of the nuclear industry, will the Secretary of State tell the House whether he is prepared to review the


information procedures of his Department and of the CEGB, especially as applied to the forthcoming test at Trawsfynydd? Does he agree that unless engineers can convince the public, by commonsense arguments, that tests should take place, in a democracy they should not take place?

Mr. Parkinson: What has alarmed the public is the comparison between the test of safety mechanism at Trawsfynydd and Chernobyl. As the hon. Gentleman knows—I explained it to him at our meeting on Friday —at Chernobyl the reactor was active, safety systems had been switched off and a deliberate experiment was carried out. This is a controlled test of a safety feature. The reactor will not be operative and the safety equipment will be working. What is being proved is that the natural circulation, built into the system and designed to produce cooling, works. That test will take place only if the Nuclear Installations Inspectorate approves of the proposals and it is carried out under its monitoring.

Miss Widdecombe: Does my right hon. Friend welcome the open information policy of British Nuclear Fuels plc, and does he agree that it will go a long way to allay public fears about nuclear safety?

Mr. Parkinson: My hon. Friend is right. Every incident that takes place, whether reportable or minor, is now recorded, and that information is filed in the Library of the House of Commons. It is also supplied to the local liaison committees and to local Members of Parliament. There is no attempt at concealment. In fact, we have the most open system in the world.

Mr. Prescott: Does the Secretary of State not recognise that what causes public concern about the experiments and controls is excessive secrecy and the leaks associated with it? That is what is causing concern at the Welsh plant. Will the Secretary of State confirm the CEGB view that the experiment that is to be conducted there is not necessary to a long-term safety review of the plant? If that is the case, will the right hon. Gentleman assure the House that the experiment is being conducted in order not to extend the life of the old Magnox plants, thus reducing the liability of the high decommissioning costs and the effect on the price for the privatisation of electricity?

Mr. Parkinson: I am afraid that I find it hard to follow that convoluted logic. However, I advise the hon. Gentleman that the test is taking place because built into the Magnox system there is a safety measure that is designed to ensure that, even if the fans fail, natural circulation will produce cooling. The test is being proposed under the most strict circumstances to prove that that safety factor works. It is a safety mechanism that is being tested.

Windscale Fire

Mrs. Ray Michie: To ask the Secretary of State for Energy if he will make a statement on the plans to remove the debris from the site of the 1957 Windscale fire.

Mr. Michael Spicer: This is a matter for the United Kingdom Atomic Energy Authority. Plans for carrying out decommissioning work on the Windscale piles, including the removal of fuel and debris, were announced by the chairman of the authority on 5 October 1987. A copy of his statement is in the Library.

Mrs. Michie: Given that the Government's radioactive waste strategy has had four major setbacks and cancellations since 1981, and knowing the opposition throughout the United Kingdom, especially in Scotland and in my constituency of Argyll and Bute, to nuclear dumping sites, will the Minister explain more clearly the way in which the debris from the 1957 Windscale fire is to be removed, when the work will be completed, how much it will cost and where it is to be stored or disposed of?

Mr. Spicer: It will be an expensive operation—it will cost tens of millions of pounds.
It will take some time — anything up to 10 years. Perhaps the hon. Lady is aware of the fact that the longer it takes, the safer it is. We have already found that radioactivity has decreased to 100th of what it was at the time of the accident. The Government have yet to pronounce their final decisions on storage.

Mr. Alan Williams: Does the Minister agree that, as with decommissioning nuclear power stations, which the Government have just decided they can leave standing for a hundred years before attempting to decommission them, the safest thing to do with the Windscale reactor is not to touch it, but to keep it under constant monitoring at its present site?

Mr. Spicer: The right hon. Gentleman may be confusing two phases in the decommissioning process. The one that we are considering here is the removal of fuel and debris from the piles. The question to which the hon. Gentleman is addressing himself is the long-term destruction of the plant. That could well take a considerable period, and he may be right that it may be a good idea to leave that for some time.

Oil Demand

Mr. Irvine: To ask the Secretary of State for Energy what is the projected level of demand for oil in the United Kingdom over the next five years; and what proportion of this will be met by output from United Kingdom oifields.

Mr. Peter Morrison: The demand for oil in the United Kingdom is expected to remain fairly constant during the next few years. On current estimates of production, the United Kingdom is likely to remain self-sufficient well into the 1990s.

Mr. Irvine: Does my hon. Friend agree that the fact that the United Kingdom is likely to remain self-sufficient in oil well into the 1990s is a considerable tribute to the oil exploration companies operating in the North sea? Does he further agree that it underlines the importance of maintaining a favourable tax regime which provides, and will provide, positive encouragement to oil exploration?

Mr. Skinner: The hon. Gentleman means subsidies.

Mr. Morrison: I certainly agree with what my hon. Friend said. What the oil companies have achieved in the North sea, both in exploration and development, has been outstanding — and, indeed, unsung up and down the land.
As for the regime in which the companies operate, it is the economic climate, the tax climate and the entrepreneurial climate that the Government have promoted that have ensured that further exploration and development go ahead.

Mr. Rowlands: Have not Ministers repeatedly praised the role of the British independent oil companies in the development of the North sea, and especially the role of Britoil? If that is so, will the hon. Gentleman now seek an urgent meeting with the chairman of BP to make it clear that the Government do not believe in the destruction of the integrity of Britoil as a company, and that if BP pursues the matter it will forfeit much of the co-operation that it receives from the Department of Energy?

Mr. Morrison: Many companies — including, of course, Britoil — have made a major contribution to North sea development.
The answer to the hon. Gentleman's point is that my right hon. Friend has made quite clear what the Government's position is in reflecting what my right hon. Friend the Chancellor of the Exchequer has said.

Mr. Salmond: Is the Minister aware of the assurances given to the House on 31 March and 1 April 1982 about Britoil's independence by the Chancellor of the Exchequer and Lord Gray, then Minister of State, Department of Energy? Does he recognise that those assurances contained the statement that the golden share would be part of
effective safeguards for Britoil's independence"?—[Official Report, 1 April 1982; Vol. 21, c. 450.
Does the hon. Gentleman accept that in present circumstances it hardly looks as though those assurances are being carried through? Does he therefore accept that the Chancellor of the Exchequer and the noble Lord misled the House as to the efficacy of the golden share when they were looking for support for the privatisation of BNOC in 1982?

Mr. Morrison: I do not accept the hon. Gentleman's statement that my right hon. Friend the Chancellor of the Exchequer misled the House when he was Secretary of State for Energy. My right hon. Friend explained his position, clearly to the Shadow Chancellor — in the present circumstances he reserves the right to use the special share.

Power Station (Fawley)

Mr. Colvin: To ask the Secretary of State for Energy when he expects to receive an application from the Central Electricity Generating Board to construct a coal-fired power station at Fawley.

Mr. Parkinson: The CEGB informs me that it expects to be in a position to submit an application for consent to construct Fawley B shortly.

Mr. Colvin: I am pleased to hear that comment. The sooner this happens, the better. Is my right hon. Friend aware of the mounting opposition to the Fawley B proposal as we manage to squeeze additional information out of the CEGB and learn a bit more about what it proposes, especially its plans for a coal-importing facility for the redistribution of coal inland over a totally inadequate infrastructure? Should there not be two applications—one submitted by the CEGB to my right hon. Friend for the power station, and a separate application to local planning authorities for the proposed coal importing facility?

Mr. Parkinson: When the CEGB decides to apply, it has to advertise its proposal to give objectors the right to register their objections. I suspect that that will lead

eventually to a public inquiry. If the CEGB wishes to build a jetty into the Solent as part of its plans to import coal, it has to apply under the Harbours Act 1964 to my right hon. Friend the Secretary of State for Transport for further permission.

Mr. Speaker: Mr. Barron — but, this question is about Fawley.

Mr. Barron: Since there has not yet been an application for consent to construct this second power station, and since it will be several years before most of the building starts, why has the Minister forced up the cost of electricity to consumers and industry from April this year, when the CEGB cannot even spend that money on the proposed power station?

Mr. Parkinson: There will be a substantial investment programme on generation and transmission in the next financial year. Nearly £1.5 billion will be invested. In the following year an increasing amount of money will be spent on Sizewell B. Some of that additional expenditure will involve Fawley. There is a big investment programme, which will grow every year from now on.

Sir Trevor Skeet: Would it not be much more economic to put a further cable across from France to import nuclear electricity at a very much cheaper price than we could produce it? Is this not a unique and odd place to put a coal-fired power station?

Mr. Parkinson: As my hon. Friend knows, we need more generating capacity in the south of England to maintain the stability of the system, for purely technical reasons. The possibility of a further link with France has not been ruled out. We may well need both.

Mr. Prescott: The Secretary of State is closing down generating capacity and mines in the northern part of the United Kingdom, and opening new generating capacity in the south. Does he accept that it would make much more sense, and be a cheaper option, to keep the jobs in the northern area and increase investment in transmission, and not go ahead with the investment in the south? Export power, not jobs, from the north to the south.

Mr. Parkinson: Most of the proposals for building power stations centre on the north. I suggest that the hon. Gentleman consult his advisers. There is a need to maintain the stability of the system by increasing the supply of power, which is inadequate, from stations in the south. It is a matter, not of transferring jobs from the north to the south, but of improving the system's stability.

Coal Industry

Mr. Hannam: To ask the Secretary of State for Energy when he next plans to meet the president of the National Union of Mineworkers to discuss the future of the coal industry.

Mr. Parkinson: I have no plans at present.

Mr. Hannam: If and when my right hon. Friend meets a chastened Mr. Scargill, will he remind him that the main reason for his substantial loss of support in the election was his aggressive and militant opposition to the modernisation of the coal industry? Will my right hon. Friend also point out that the one way of losing more jobs in the mining industry is continued industrial unrest and strikes?

Mr. Parkinson: My hon. Friend is right. When Mr. Scargill was elected president he promised members of the National Union of Mineworkers that he would preserve jobs and stop closures. Mr. Scargill was elected by 70 per cent. of an electorate of 200,000 on that promise. Yesterday he was re-elected by 54 per cent. of an electorate of 80,000. That is the measure of the damage that Mr. Scargill has managed to do and the failure of his previous promises.

Mr. Haynes: Is the Secretary of State aware that this question appears to have come from Conservative Central Office as a plant? —[Interruption.] I shall be gentle with the right hon. Gentleman. However, when he meets the president of the National Union of Mineworkers, will he congratulate him on his prophecy that the present Administration would have a massive pit closure programme? They have brought that programme into operation, and the end result has been that youngsters of 30 have been taking redundancy, never to work again. Moreover, what about the youngsters leaving school in my constituency, who cannot obtain a job at the pit, although they would like to?

Mr. Parkinson: Conservative Members would say, as would many people in the industry, that militancy, a refusal to negotiate and a determination to resort to strikes and other forms of industrial action have produced the accelerated closure programme—and, by the way, will do so again if that policy is continued.

Mr. Ashby: If my right hon. Friend meets Mr. Scargill, will he remind him that in Leicestershire only 100 miners voted for him? Will my right hon. Friend also remind Mr. Scargill that Mr. Jack Jones, the leader of the south Leicestershire miners, said that all that Mr. Scargill was trying to do was to continue class warfare—whatever, he said, class warfare could possibly mean in 1988?

Mr. Parkinson: I heard Mr. Jones this morning, and I thought that he talked a lot of good sense. I remind the House that, if Mr. Scargill's policies had not driven 26,000 people out of his union and into a rival union, he would have been defeated soundly. He now speaks for a minority of mineworkers, because those 26,000 are 20,000 more than his majority.

Mr. Patchett: May I congratulate Mr. Scargill on his victory, despite the interference of British Coal, the media and members of Her Majesty's Government in the trade union election campaign?

Mr. Parkinson: I do not accept the hon. Gentleman's final point. The Government have no vote in the election, and kept out of it. The mineworkers made up their own minds and, as I said earlier, instead of having the support of 70 per cent. of 200,000 electors, Mr. Scargill now has that of 54 per cent. of 80,000.

Mr. Brandon-Bravo: The future of the coal industry is, in some ways, very much the reverse side of the coin that we discussed on question 3 concerning redundancy. Does my right hon. Friend not feel that the re-election of Mr. Scargill is likely to increase those pressures of redundancy, rather than decrease them, because, as he puts it, British Coal is the enemy?

Mr. Parkinson: Many people believe that Mr. Scargill is as interested in using the union to promote his political

views as he is in promoting the welfare of his members. Until he puts the politics second and the industry first, the industry will continue to decline.

Mr. Skinner: The right hon. Gentleman got his job back.

Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) must not keep interrupting. 1 called him on an earlier Question, and he was out of order then.

Mr. Eadie: The Secretary of State cannot bandy figures and percentages across the House in this fashion. He knows perfectly well that many Members of the House would settle for 53 per cent. of the vote at an election, bearing in mind that the Government whom he represents did not even get 50 per cent. at the last election. Why does the Minister not put his money where his mouth is, meet the president of the National Union of Mineworkers, and put on the agenda conciliation and not confrontation?

Mr. Parkinson: I understand that in four and a half years my predecessor met Mr. Scargill once. That was not because he did not want to meet him, but because Mr. Scargill did not want a meeting. Mr. Scargill should do his talking to the chairman of British Coal. Coal is an industry, and management and labour should get together to promote the welfare of the industry. It is not a political battleground. The hon. Gentleman is trying to make it one.

Oil Exploration

Mr. Summerson: To ask the Secretary of State for Energy what is the trend in issues of licences for oil exploration for United Kingdom offshore areas since 1979.

Mr. Peter Morrison: There have been four rounds of licensing over this period, at intervals of approximately two years. A total of 285 licences have been issued.

Mr. Summerson: In the light of that reply, will the Minister show us the contrast by giving the comparable figures for the period 1974 to 1979?

Mr. Morrison: The figure for this Government is 285 licences. During 1974 to 1979, 54 licences were issued. The Government have, therefore, issued over five times that number.

Oral Answers to Questions — THE ARTS

Area Museums Councils

Mr. Fisher: To ask the Minister for the Arts what information he has on the level of funding in 1988–89 for the area museums councils.

The Minister for the Arts (Mr. Richard Luce): The grants to the English area museums councils are administered by the Museums and Galleries Commission. It is for the commission to decide the level of grants from within its grant-in-aid. I understand that the increase in the basic grant to the councils in 1988–89 is some 4 per cent.

Mr. Fisher: Does the Minister accept that although long-term underfunding of area museums councils has been a serious threat to them, there is an even greater threat to them in clause 28 of the Local Government Bill, which is now being considered in another place? That


clause would prevent local authorities from "promoting homosexuality" and could mean that local authority museums and galleries could not, for instance, put on, promote, advertise and catalogue pictures by David Hockney? Does the Minister approve of that form of censorship and that threat? Will he say categorically that the clause is a threat to area museums councils and local authority museums?

Mr. Luce: First, I do not accept the hon. Gentleman's suggestion that the area museums councils are underfunded. The money that goes to local museums and galleries, including through the rate support grant, amounts to a total of £72 million. That is a substantial sum of money.
I am not clear as to how the hon. Gentleman's second question relates to his first question. Clause 28 is a matter for my right hon. Friend the Secretary of State for the Environment. Like my colleagues, I support the intention of the clause, but I recognise that it is causing anxiety in the arts world. I have been advised that local authorities seeking simply to provide the public with access to a comprehensive range of artistic and literary material would not be put at risk by that provision.

Mr. Harry Greenway: Will my right hon. Friend comment on the amount of money raised through voluntary funding by the Victoria and Albert museum? It is remarkable that that museum, through its own efforts, and separately from public funding, has raised so much money and made such good use of it.

Mr. Luce: I entirely agree with my hon. Friend. The more money that is raised by joint funding by the public and private sector, the better. There are many examples around the country of museums that have been very successful in raising more resources from the private sector in addition to the state funding that they receive.

Greater London Arts

Mr. Sedgemore: To ask the Minister for the Arts whether he plans to meet the chairman of Greater London Arts to discuss the funding of the arts in London in 1988–89.

Mr. Luce: I visited the offices of Greater London Arts and met the chairman and director last year. I expect to meet them again from time to time this year, and funding will no doubt feature in our discussions.

Mr. Sedgemore: Is the Minister satisfied that, whereas every other regional arts association is receiving a cut in its grant in real terms, Greater London Arts is receiving a cut in real terms and in cash? What is his message to the clients of GLA who have been asked to submit plans on the basis of a 10 per cent. reduction in their expenditure on account of a £232,000 shortfall due to abolition cuts, and cuts in the Arts Council grant?

Mr. Luce: I am interested in the hon. Gentleman's question, because I do not know where he got his figures. The simple fact is that the Arts Council has not yet reached an agreement with Greater London Arts about the sums of money that will be allocated. GLA is doing an excellent job. It has nearly £8 million worth of taxpayers' money in this financial year to allocate to arts organisations. Despite all the remarks about the South Bank and its achievements, it deserves enormous credit. For the first time since the Festival of Britain in 1951 it is undertaking

a new festival with artistic collaboration from all types of art. There is £1 million of extra sponsorship from British Commonwealth Holdings. That is a good example of the sort of arts activity in London.

Mr. Colvin: Does my right hon. Friend agree that one way of supplementing official funding for the arts in London might be by way of the Government's new payroll giving scheme? How optimistic is he that that scheme will work? Will he consider holding discussions with his Treasury colleagues before the forthcoming Budget to see whether a little more beef can be put into the scheme, which looks at present as if it might be a bit of a damp squib?

Mr. Luce: My hon. Friend is right to draw attention to the importance of the payroll giving scheme. It is another way — a new way — in which individuals can be encouraged, with tax incentives, to give to charitable bodies, including the arts. I am sure that my right hon. Friend the Chancellor of the Exchequer will note the views expressed by my hon. Friend. I believe that the scheme should not be underestimated and that the maximum number of people should be encouraged to join it. The scheme is now available to the Civil Service, and 300,000 civil servants could take part in it.

Mr. Tony Banks: Let me tell the Minister in response to his inquiry — [HON. MEMBERS: "Question."] No, let me tell him that the information given by my hon. Friend the Member for Hackney. South and Shoreditch (Mr. Sedgemore) about the cut in the base budget for GLA came from the Arts Council. Is the Minister aware that, because of the cut in the money GLA will be receiving as a result of abolition, there will be a major economic crisis facing the arts in London? Whatever the Minister has done elsewhere in the country, he has clearly failed the arts in London yet again.

Mr. Luce: Two years ago, when we were debating abolition, the hon. Member for Newham, North-West (Mr. Banks) spent his time saying that arts activity on the South Bank would collapse and that arts in London would collapse. The opposite has happened. I have just described to the House the excellent news about the South Bank. It is approaching the matter in an imaginative fashion and the plan for its festival this coming spring is the first since 1951. It is the opposite of what the hon. Gentleman has been saying.

Crucible Theatre, Sheffield

Mr. Caborn: To ask the Minister for the Arts when he next plans to visit the Crucible theatre in Sheffield.

Mr. Luce: I enjoyed my visit to the Crucible theatre in February last year and I admire the work it does.

Mr. Caborn: When the Minister next visits the Crucible theatre in Sheffield, will he take up the difficult financial position in which it finds itself, particularly after the statement by the Arts Council that over the next three to five years the parity of funding should be equal to that of the local authorities? With the restrictions on the local authorities, that is difficult, if not impossible. Will the Minister also take up the matter of clause 28 of the Local Government Bill, which is going through the Lords? Powerful statements were made last night by Ian McKellen at the Olivier awards, supported by the editor


of The Observer. The Crucible is a civic theatre and it will be one of those affected by clause 28. In Sheffield it is seen as major censorship of a progressive theatre.

Mr. Luce: The evidence is that the Crucible is an enterprising theatre. A total of 60 per cent. of its resources is now raised from private sector earnings, and it deserves credit for that. It has 82 per cent. audiences on average, and has had throughout 1986 and 1987. It is a good candidate to negotiate an incentive funding arrangement between itself and the Arts Council and to take advantage of the three-year funding now available so that it can plan a stronger financial base in the next three years.

Arts Council (Grant)

Mr. Butler: To ask the Minister for the Arts how much of the grant to the Arts Council may be carried forward to the following fiscal year.

Mr. Luce: The Council is allowed to carry over at the end of the financial year a working balance of up to 2 per cent, of its grant-in-aid, subject to agreement with my Office.

Mr. Butler: I welcome the increased flexibility for the Arts Council. However, will my right hon. Friend tell me whether any money that is left over for the Arts Council at the end of the financial year can be carried forward to next year and used to increase the impact of incentive funding even further?

Mr. Luce: I know of my hon. Friend's interest in the matter. As I said, a working balance of up to 2 per cent, can be carried over, subject to my agreement. The money allocated for incentive funding will be £3.5 million in the first financial year, and that is an example of the flexibility in the arrangements, which will be of some help to arts organisations.

Mr. Robert Sheldon: Is the Minister aware that because of cuts in local authority funding the local authority contribution to the arts will be cut drastically? All that the right hon. Gentleman is doing will not cover that deficiency. Is it not important that any help, even to the extent of carrying forward extra spending, should be specially considered?

Mr. Luce: The practical evidence from round the country is that local authority support for the arts has been increasing, where local authorities identify arts projects that will be a good investment in their areas. Actual expenditure by local authorities on the arts, including museums and libraries, has been increasing. It is for the local authorities to decide how much to spend. It is their choice.

Mr. Cormack: Will my right hon. Friend, whose achievements are considerable, assure us that he regards 2 per cent, as a precedent, not as a final solution?

Mr. Luce: The present arrangements allow for a 2 per cent, carryover. It gives some flexibility, especially in incentive funding.

Mr. Heffer: Is it not clear that local authorities need all the assistance that they can get to ensure that the arts are made available to the local communities? The Minister mentioned the South Bank. One of the best exhibitions that has been seen on the South Bank for some time was the Diego Rivera exhibition, which should have been

shown in every part of the country. Is it not important to ensure that every area has the opportunity to see such fine exhibitions.

Mr. Luce: I agree with the hon. Gentleman that the arts are not only for London but for all parts of the country. For example, we have set aside a special sum from the heritage budget and asked the Museums and Galleries Commission to make it easier to enable exhibitions to be mounted in all areas. I warmly support the idea.

Oral Answers to Questions — CIVIL SERVICE

Staff Morale

Mr. Teddy Taylor: To ask the Minister for the Civil Service when he next plans to meet trade unions representing civil servants to discuss staff morale in Southend-on-Sea; and if he will make a statement.

The Minister of State, Privy Council Office (Mr. Richard Luce): I have no plans at present to meet the Civil Service trade unions.

Mr. Taylor: In view of the serious problems of securing and retaining staff in some of the major Civil Service offices in Southend, solely because of the high cost of housing and other costs, is it not time that the Government and the Civil Service unions began to discuss regional pay which would reflect the cost of living in different areas? Is my right hon. Friend willing to visit Southend, some time reasonably soon, to discuss the problems with those involved and to see for himself the seriousness of the position?

Mr. Luce: I am grateful to my hon. Friend. May I answer his last question first by saying yes, I am prepared to meet the 3,000 or so customs and excise officials in Southend, who are doing an excellent job. Pay and conditions are principally a matter for my right hon. Friend the Chancellor of the Exchequer, but, as my hon. Friend will know, arrangements are being made to offer flexible pay schemes and local pay additions, which would allow up to £600, from additional sources of money, to be spent in the area round London, including my hon. Friend's constituency. Those flexible pay arrangements are the best way to deal with the recruitment and retention problems of the Civil Service.

Mr. Livingstone: Does the Minister agree that it might help to retain civil servants in Southend if they were given the same £8,000 housing allowance as the Member of Parliament for Southend, East (Mr. Taylor) receives?

Mr. Luce: I shall not take that point seriously. One sees varying costs of living in the different regions, and the south-east has the highest. A flexible pay scheme that would allow for those variations would be an important move forward.

Civil Service College

Mr. Nicholas Bennett: To ask the Minister for the Civil Service whether there has been any recent increase in the number and range of courses provided by the Civil Service college; and if he will make a statement.

Mr. Luce: The total volume of college provision remains fairly constant, but an increasing proportion of courses are run in support of recent initiatives to improve the efficiency and effectiveness of government.

Mr. Bennett: Does my right hon. Friend agree that one of the ways in which professionalism in the Civil Service could be improved is through the provision of external qualification courses? What opportunities are provided for civil servants at the staff college to receive those external qualifications?

Mr. Luce: My hon. Friend is right. The college has a high reputation for achieving results in external qualifications. Some 30 per cent. of college training is related to qualifications of professional and specialist bodies. As I have said, the results are very high indeed.

Mr. Winnick: What advice is given at the college to senior civil servants who find that the Cabinet Minister whom they are serving is being constantly undermined by hostile press stories coming from his own Cabinet colleagues, as is happening now with the Secretary of State for Social Services?

Mr. Luce: 1 am not sure whether I follow the hon. Gentleman's question, but very often I do not follow him.

Mr. Soames: Although the courses provided by the Civil Service college are excellent, will my right hon. Friend consider taking en bloc courses for civil servants at other colleges so that they may have the opportunity to broaden their horizons in colleges outside the Civil Service environment?

Mr. Luce: My hon. Friend has an important point. It is worth noting that the college provides about 5 per cent. of the training of civil servants. About 75 per cent. is internal departmental training, and my hon. Friend will be interested to know that the remaining 20 per cent. comes from external providers. That is an important contribution to the standards of the Civil Service. In addition, many outsiders come in to lecture at the college, and sometimes even to participate.

Political Activities

Mr. Tony Banks: To ask the Minister for the Civil Service if there are any proposals to change the regulations governing the political activities of civil servants; and if he will make a statement.

Mr. Luce: New rules on the political activities of civil servants, which were agreed with the Civil Service unions, were announced in the House on 19 July 1984 and introduced in September 1984. It was agreed then that the rules should be reviewed every three years. A review is consequently now taking place, but it is too early to draw any conclusions.

Mr. Banks: Is it not a fact that the Government are destroying the political impartiality of the Civil Service by using civil servants as Tory stooges? Bernard Ingham immediately comes to mind. When will the Minister address himself to the serious problem of the way in which the Civil Service is being used in a politically partial fashion by the Government, and particularly by the Prime Minister?

Mr. Luce: The hon. Gentleman seems this afternoon to have an even greater capacity than usual to talk absolute nonsense, and that is saying something. My experience over two and a half years as the Minister of State responsible for the Civil Service has led me to believe that

we have a service of which we can be highly proud. It is professional and the vast majority of civil servants are utterly impartial, and that is the way that it should be.

Mr. Cormack: Is it not a slander verging on the totally defamatory to call Mr. Bernard Ingham a stooge?

Mr. Luce: It is. My hon. Friend is absolutely right.

Dr. Marek: Will the Minister assure the House that the present review will be conducted openly between the Government and the trade unions, and that any results of the review will be mutually acceptable to both sides?

Mr. Luce: Yes, I can give that assurance to the hon. Gentleman. It is worth reminding him that the main purpose of the rules is to give maximum freedom to civil servants to take part in political activities, consistent with a need to maintain ministerial and public confidence in the political impartiality of the Civil Service.

Secondment

Mr. Chapman: To ask the Minister for the Civil Service what initiatives he is taking to encourage part-time or short-term periods of secondment between the Civil Service and industry.

Mr. Luce: Part-time and short-term secondments can play an important part in interchange between the Civil Service and industrial organisations, as can full-time and longer secondments. As an aid to stimulating interchange generally, we published towards the end of last year a promotional leaflet, "The Ins and Outs of Civil Service Secondments", a copy of which has been placed in the Libraries of Parliament.

Mr. Chapman: I appreciate the increase in recent years, and I am aware of the practical difficulties, at least of longterm secondment, but will my right hon. Friend nevertheless agree that the prospect of short-term or part-time secondment—even if the short-term was only for three to six months — would be benefitial to industry and to the Civil Service? Will he consider particular schemes for short-term secondments?

Mr. Luce: I am grateful to my hon. Friend for his continuing interest in this problem. In 1986 there was an increase of 22 per cent. over the previous year in inward and outward secondments, but I am now reviewing the overall targets for inward and outward secondment and I hope to be able to say something about that in a few weeks' time. I shall consider the point raised by my hon. Friend about short-term attachments. This is something at the senior levels of the service that we are seeking to increase.

Mr. Wells: Will my right hon. Friend consider what inducements and encouragements he can give to industrial candidates wishing to work in the Foreign Office? He will know that the Foreign Office is able to second its civil servants to industry, but industry cannot reverse the position. Therefore, some incentive is needed.

Mr. Luce: I shall consider that problem with my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs and draw his attention to it. Some exchange already lakes place both ways, but, without further notice, I should have to discuss the matter with my right hon. and learned Friend.

Ethnic Communities

Mr. Robert G. Hughes: To ask the Minister for the Civil Service what steps he is taking to increase the opportunities offered to members of the ethnic communities employed in the Civil Service.

Mr. Luce: The Civil Service has a comprehensive programme of monitoring to study the progress of ethnic staff and identify areas for further action. Pilot schemes are currently under way in a number of Departments to monitor promotion boards and ensure that blacks and Asians have every chance of reaching the higher grades by selection on merit.

Mr. Hughes: Does my right hon. Friend have any plans to seek to increase representation of blacks and Asians in the senior levels of the Civil Service?

Mr. Luce: It is worth noting that the surveys make it plain that the proportions of black and Asian people in the Civil Service are similar to those in the population as a whole, but, of course, the weak areas are in the higher grades. Certainly, on the basis of selection on merit and equality of opportunity, we are doing everything possible within the service to ensure that they have the opportunity for promotion.

Royal Ulster Constabulary (Stalker-Sampson Investigations)

The Attorney-General (Sir Patrick Mayhew): With permission, Mr. Speaker, I wish to make a statement on directions given by the Director of Public Prosecutions (Northern Ireland) following the investigations carried out by Mr. Stalker and Mr. Sampson.
In November and December 1982, in three separate incidents in County Armagh, six persons were killed and one person was seriously wounded by shooting by members of the Royal Ulster Constabulary.
The circumstances of each shooting were investigated by the CID of the RUC and three files reporting the results of these investigations were submitted by the Chief Constable of the RUC to the Director of Public Prosecutions for Northern Ireland for his consideration and decisions.
In relation to the incident which occurred on 11 November 1982 at Tullygally East road, Craigavon, in which three persons, Eugene Toman, James Gervaise McKerr and John Frederick Burns, were killed, the Director directed that three members of the RUC be prosecuted for the murder of Eugene Toman. These members were subsequently tried for murder and acquitted.
In relation to the incident which occurred on 12 December 1982 at Mullacreevie park, Armagh, in which two persons, Peter James Martin Grew and Roderick Carroll, were killed, the Director directed that one member of the RUC be prosecuted for the murder of Peter James Martin Grew. This member was subsequently tried for murder and acquitted.
In respect of the other incident which occurred on 24 November 1982 at Ballynerry road north, Lurgan, in which Michael Tighe was killed and Martin McCauley was seriously wounded, the Director concluded that the evidence did not warrant criminal proceedings and directed no prosecution.
Upon consideration of the evidence and information in the files initially submitted to him, the Director required further investigations to be undertaken and the results of these reported to him. When the results of such further investigations were reported to the Director, it appeared to him that, in certain of the statements of evidence furnished for his consideration, material and important facts had been omitted, and that matters which were untrue and misleading in material and important respects had been included.
In consequence of this, on 11 April 1984, the Director formally exercised his statutory power to request the Chief Constable to ascertain and furnish to him full information with regard to the circumstances in which false or misleading evidence was provided by any member or members of the RUC. He also requested him to investigate whether there was evidence to suggest that any person was guilty of an offence of perverting, or attempting or conspiring to pervert, the course of justice, or of any other offence in connection with the investigation of the three shooting incidents.
On 24 May 1984, the Chief Constable of the RUC appointed Mr. John Stalker, deputy chief constable of

Greater Manchester police, to conduct an investigation. Mr. Stalker was furnished with a full copy of the Director's request, dated 11 April 1984.
On 18 September 1985, Mr. Stalker delivered to the Chief Constable of the RUC an interim report on the investigations that he had conducted up until that date. On 13 February 1986, the Chief Constable of the RUC furnished to the Director Mr. Stalker's interim report, together with the Chief Constable's observations upon it. On 4 March 1986, the Director directed that futher investigations be undertaken.
On 29 May 1986, Mr. Stalker ceased to have responsibility for the investigation that he had undertaken. Mr. Colin Sampson, chief constable of West Yorkshire police, then undertook responsibility for the continuing investigation, assisted by the same team of detectives and by an assistant chief constable from West Yorkshire police. On 22 October 1986, 23 March 1987 and 10 April 1987, reports were delivered by Mr. Sampson to the Chief Constable of the RUC and on the same dates to the Director of Public Prosecutions for Northern Ireland.
The interim report by Mr. Stalker and the reports that were subsequently delivered by Mr. Sampson together provided the Chief Constable and the Director with the full results of detailed and thorough investigations undertaken by the investigation team of Greater Manchester police, initially under the leadership of Mr. Stalker and subsequently under the leadership of Mr. Sampson.
In regard to the shooting incidents to which I have referred, the Director has considered all the facts and information ascertained and reported by Mr. Stalker and Mr. Sampson, and he has re-examined the original RUC investigation files. He has concluded that the evidence does not warrant any further prosecution in respect of the shootings which occurred on 11 November 1982 and 12 December 1982 and which have already been the subject of prosecutions. He has further concluded that the evidence does not warrant any prosecution in respect of either the fatal shooting or the wounding that occurred on 24 November 1982. I have considered the Director's conclusions and I agree with them. He has given directions accordingly.
The Director has, however, concluded that there is evidence of the commission of offences of perverting or attempting or conspiring to pervert the course of justice, or of obstructing a constable in the execution of his duty, and that this evidence is sufficient to require consideration of whether prosecutions are required in the public interest, and he has consulted me accordingly.
I have therefore taken steps to acquaint myself with all relevant circumstances, including matters concerning the public interest and, in particular, considerations of national security that might properly affect the decision whether or not to institute proceedings.
I have informed the Director fully with regard TO my consultations as to the public interest, and in the light of all the facts and information brought to his notice, the Director has concluded, with my full agreement, that it would not be proper to institute any criminal proceedings. He has given directions accordingly.
The Director has arranged to discuss with the Chief Constable and deputy chief constable of the RUC safeguards to ensure that, in the future, facts and


information reported to the Director are in all respects full and accurate, whether or not any security interest is involved.
In respect of other matters arising from the investigations, the Secretary of State for Northern Ireland has already informed the House that he would wish, at the earliest opportunity, to make a statement on those issues that affect his responsibilities. Now that the decisions on prosecution have been taken, I understand that he hopes to report shortly to the House.

Mr. Kevin McNamara: We on this side are pleased at last to have had a statement from the Attorney-General, but that is the extent of our pleasure. You will recall, Mr. Speaker, that the matters concerning the allegal shoot-to-kill policy have been raised repeatedly by my right hon. and hon. Friends and myself. You will recall the widespread concern that led to the appointment of Mr. John Stalker. You will remember that, in May 1986, he was abruptly removed from the RUC inquiry and was replaced by Mr. Colin Sampson, chief constable of West Yorkshire, who was also asked to inquire into the allegations directed at Mr. Stalker which had led to his suspension. You will recall that that greatly increased some hon. Members' concern about the inquiry into the RUC and the consequent further delays in what had already become a protracted affair.
I have gone briefly through the events to remind the House of what we had to wait two years for, despite repeated Opposition urgings for a statement. In the meantime, there has been growing concern in Northern Ireland, Britain and international circles about the affair. Six men died in 1982. A coroner resigned. A deputy chief constable began an inquiry and then found himself the subject of an inquiry. We have had allegations of RUC cover-ups, of perjury by police officers, of illegal incursions by members of the security forces in the Republic of Ireland. Some questions have been raised about the RUC special branch, about the role of the headquarters mobile support units, about the involvement of MI5 and about the withholding of information from police inquiries by members of the security forces.
In the context of all this, and the long wait for the Government, we have listened with interest to the statement by the Attorney-General. I find it incredible beyond belief that the Government have come to this conclusion. Article 8 of the Anglo-Irish Agreement talks about achieving confidence in the administration of justice in Northern Ireland. That article has suffered a grave blow from today's statement, which has also undermined all the efforts of the RUC since Portadown to gain acceptance by the minority community.
We must therefore ask what the grounds of national security are. What are the grounds of public interest which could shield members of the police force, against whom there was evidence of perjury, of conspiracy to pervert the course of justice, of impeding a police constable in the execution of his duty? All this, yet we are to be denied knowledge of the reasons why the Government have come to this conclusion. It is insufferable, it is a Government of gag that we have had, when we have made effort after effort, to use this particular method.
What we need to know now is if there was a shoot-to-kill policy. We will never know. What is the Government's

attitude to the use of lethal force, necessary force or reasonable force? It has been alleged that before his inquiry, Mr. Stalker faced delays, evasions, lies and refusals to act from members of the RUC, bent on obstructing his work. That is the sort of statement that was made. That was the attitude of people at that time. Now the Government seem to support that same degree of hindrance to the work of justice.
We, of course, are in no position to comment on these matters, because we have not seen the reports. Will the Attorney-General therefore publish both the Sampson reports, so that we can form a judgment? Quite honestly, on this matter we do not trust the decision of Mr. Attorney. The question of justice in Northern Ireland is too important a matter. All this undermines confidence in the forces of law and justice. It is a grave blow to peace in that area.

The Attorney-General: The hon. Gentleman has described this as the decision of the Government.

Mr. Brian Sedgemore: It is down to you.

The Attorney-General: The decision is that of the Director of Public Prosecutions—a decision with which I entirely agree.
As was laid down in a classic statement — —[Interruption.]

Mr. Speaker: Order. This is a very serious matter. Mr. Attorney has an absolute right to give his reply.

The Attorney-General: As was laid down in a classic statement by a Labour Attorney-General, Sir Hartley Shawcross, the Attorney-General of the day has the constitutional duty to consider where the public interest lies in relation to any question of prosecution. He is entitled, said Sir Hartley Shawcross, to consult in some circumstances. In some circumstances, he said, "he would be a fool" not to do so. I have consulted. It is the right of those whom I consult to indicate to me matters that in their view bear upon the public interest. The decision is the decision of the prosecuting authority. This is not a decision which requires my statutory consent; it is taken by the Director, and I wholly agree with it.
Secondly—he is entitled to say this—I am told that the hon. Member for Kingston upon Hull, North (Mr. McNamara) does not trust me. If he will allow me to say so, I can bear that philosophically. But in the case of a distinguished public servant, Sir Barry Shaw, who has held the office of Director of Public Prosecutions in Northern Ireland for 16 years and has established standards of unexampled integrity, as anybody in Northern Ireland will confirm, I resent that aspersion.
I was asked whether there is a shoot-to-kill policy, and I was told, "We will never be told." It is plain from my statement that no offence has been disclosed, apart from possible cases relating to perversion of the course of justice. That means that no evidence has been disclosed of any offence—such as incitement to murder—such as would be comprised in what has been loosely called a shoot-to-kill policy.
I have been asked, "What is the Government's attitude to the use of force?" Every police officer in Northern Ireland is subject to the law and will continue to be subject to the law; accordingly, his actions are liable to the most detailed investigation, such as has been carried out by Mr.


Stalker and Mr. Sampson. The law relating to the use of force applies to a police officer just as much as it does to any other citizen.
I have been asked, "What are the grounds of national security that are involved?" In conformity with the policy of long standing of successive Governments, I am not prepared to comment on national security. But I will say that national security in Northern Ireland and elsewhere gives rise to considerations that affect the safety of people's lives. In judging the public interest, I, and any prosecuting authority, must balance one harm to the public interest against another. That is one of the tasks that our constitution places on me, among others.
On the other question of whether the report will be published, my right hon. Friend the Secretary of State for Northern Ireland has, on several occasions, informed the House that, in conformity with the usual practice relating to reports on police investigations into criminal matters, the report will not be published.

Mr. Ivan Lawrence: Will my right hon. and learned Friend confirm that, apart from the fact that if he had taken any other conclusion it would have meant overruling the decision of an impeccable public servant in a wholly independent context, to have taken any other course would have meant putting at risk the lives of Crown servants completely innocent of any wrongdoing? To have taken such a course would have been completely unacceptable to the House or the country at large.

The Attorney-General: While I do have power to direct a prosecution and I do have power to direct no prosecution, I gave no direction to the Director of Public Prosecutions for Northern Ireland; the Director reached this decision, and he did so with my full agreement. I agree entirely with my hon. and learned Friend about the danger to lives that must be considered in the context of matters of national security.

Mr. Ken Maginnis: I welcome the statement in so far as I believe that its conclusion is in the best interests of everyone. However, one cannot be other than dissatisfied with some of the information that is made available to us.
The Stalker-Sampson saga has been most unfortunate. It has been laced with rumours, counter-rumours and allegations that have caused disquiet throughout the community. One is unable to sort out matters concerning Manchester as distinct from those concerning Northern Ireland.
One must recognise that, of the people who were killed, five were accepted and recognised as being members of the IRA. The right hon. and learned Gentleman will admit that members of the security forces face tremendous difficulties in dealing with known terrorists. Part of the difficulty is not, as the hon. Member for Kingston upon Hull, North (Mr. McNamara) suggested, whether or not the police have a shoot-to-kill policy, but rather a recognition of the fact that the IRA has a shoot-to-kill policy and a bomb-to-kill policy. Until there is proper law to deal with these people then, I believe, our security forces will continue to run into the same sort of problem that they faced in Armagh and Lurgan.
I hope that the right hon. and learned Gentleman will agree with me that, until we recognise that the civil law is inadequate to deal with terrorism in Northern Ireland, and until special arrangements are made to take the terrorists

off our streets, we may, again and again, see this type of unfortunate situation, which does not help the people whom I represent.

The Attorney-General: I must say to the hon. Gentleman that matters of policy for the criminal law, as distinct from the civil law, in Northern Ireland are not for me, and therefore he will excuse me from answering that part of his question. We will all acknowledge the difficulty to which he refers, which confronts the security forces. I must emphasise that the security forces are subject to the law, as is every other citizen of this country, whether in Northern Ireland or in Great Britain.

Sir John Biggs-Davison: Will my right hon. and learned Friend confirm that, in due course, my right hon. Friend the Secretary of State for Northern Ireland will be coming to the House to report on any disciplinary implications arising from his statement and any implications for the discipline and control of the RUC?

The Attorney-General: I am very happy to confirm what I have said in my statement, and what my right hon. Friend the Secretary of State has said on many occasions in this House—that he will wish to come at an early opportunity to the House and make a statement on those issues affecting his responsibilities that arise out of these reports.

Mr. Seamus Mallon: Does the Attorney-General agree that this is, in effect, a very sad day for the North of Ireland? It is sad on three counts. It is sad because six people who were my constituents and who were unarmed were killed in 1982. No inquests have been held, and as a result of this statement—

Mr. Maginnis: They were not your constituents.

Mr. Mallon: I said "as of then"—there have been redrawings of the boundaries since. We will never know the answer to that question. It is sad from the point of view of the communities and the families of those people.
Secondly, does the Attorney-General agree that it is a very sad day for those who believe in the process of justice in the north of Ireland? Make no mistake about it, justice has been dispensed with in this statement to cover up the murky and illegal methods of MI5 and MI6, and the darker elements within the RUC. Will he further agree that that section of the community that has been trying to wean people away from violence and trying to establish confidence in the process of justice and in the process of policing has been dealt a tremendous body blow?
In conclusion, does the Attorney-General agree with the premise that, once one dispenses with justice in a Northern Irish or any other context, one has dispensed with the prospects for peace? Does he not agree that that body blow to the hope for the maintenance of freedom of speech and justice in Northern Ireland, which are indispensable and cannot be separated, have been dealt a serious, if not terminal, body blow by his statement?

The Attorney-General: Northern Ireland is a sad Province; with that, every sensible person in these islands must agree. The hon. Gentleman, whose constituency has more than its fair share of sadness, asked about inquests. Inquests will, of course, be held in due course, and they are no part of my ministerial responsibility.
As to the standards of justice, I remind the hon. Gentleman that in respect of the killings, of which he


properly reminds the House, four members of the RUC have been prosecuted by the Director of Public Prosecutions upon the application to their cases of the standard rules and criteria that apply to prosecution decisions. Those standard criteria themselves include reference to the question whether the public interest requires a prosecution.
I therefore reject any aspersion—if such an aspersion is intended—upon the independence and integrity of the Director of Public Prosecutions. However, I remind the hon. Gentleman that the standard criteria require the question of the public interest to be considered. He will know, perhaps with better cause than most, that the public interest in Northern Ireland must embrace questions of national security and that national security in Northern Ireland has connotations that bear upon the safety of a very large number of individuals.

Mr. Michael Mates: In deciding whether this action is acceptable to the House, is it not important to bear in mind that, for 16 years, Sir Barry Shaw has been the most respected Director of Public Prosecutions? He has been widely praised by hon. Members from all parties, including the hon. Member for Kingston-upon-Hull, North (Mr. McNamara) and his integrity has never been questioned. Is it not therefore reasonable for us to accept that this decision, difficult as it may be, will have been taken with all the honour that he has applied to his job over the past 16 years?

The Attorney-General: My knowledge of Northern Ireland extends over some five years in my position as a Law Officer, and some hon. Members' knowledge is far greater than mine. Anyone who has that knowledge will concur with what my hon. Friend has said. The office of Director of Public Prosecutions of course calls for immaculate impartiality and integrity, whether that office is held in this country—I should say, in Great Britain—or in Northern Ireland. I entirely agree with what my hon. Friend has said. I can only record my own impression. Over the past five years I have never met a single person from any sector of Northern Ireland society or any interest group who has cast a single aspersion upon Sir Barry Shaw's discharge of his responsibilities.

Mr. Stuart Bell: Will the Attorney-General accept that it is not the Director of Public Prosecutions in Northern Ireland whom we seek to hold to account? It is the Attorney-General whom we seek to hold to account. Notwithstanding his dulcet tones, will he not accept that he has acted in a most high-handed manner? If there is evidence of the perversion of the course of justice, why is that evidence not put before a court of law to be tested? Why should we have cover-up rather than accountability? If there are two concepts—that justice must be done and that it must be seen to be done—why is it that in this case we shall have neither?

The Attorney-General: I do not think that the hon. Gentleman can escape the consequences of blaming the Director of Public Prosecutions for making a decision that is a dishonest one, by saying that it is not his decision but mine.

Mr. Gerald Kaufman: You said that it was your decision.

The Attorney-General: I did not say that it was my decision; nor was it my decision. I will say again, for the benefit of the right hon. Gentleman, that this is a decision for the Director of Public Prosecutions and it was made by the Director of Public Prosecutions. Sir Barry Shaw would never accept a decision or trim his own opinion to take a decision that was contrary to what he believed to be right—I do not believe that he would ever do so, but he would certainly not do so without a direction from me, and there has been none.
The hon. Member for Middlesbrough (Mr. Bell) asked why we could not have this tested in a court of law. That is a consideration for which I have the deepest sympathy. I have said to the House that, in weighing the public interest, as I am constitutionally obliged to do, and as the Director is obliged to do, one has to balance one harm to the public interest against another. That is not an easy consideration. It is one that causes me the deepest anxiety. Having done that to the best of my ability, it is my duty to announce my decision. —[Interruption.] No, it is my responsibility to announce my resolution of the balancing requirement and to communicate it to the Director. It is for the Director to say whether he agrees with it. The Director has made this decision — that is his responsibility—and it is one with which I wholly agree.
I agree that it is an anxious matter. I should like in all circumstances, wherever it is consistent with the national interest, to have evidence tested in a court of law. In this case, it would not be in conformity with the public interest by reason of the matters to which I have referred in connection with the national security.

Mr. James Kilfedder: Is the Attorney-General aware that his decision will give great satisfaction to the long-suffering and hard-pressed people of Northern Ireland, of all religions, who desire peace and who are facing a war in Northern Ireland that has now been going on for between 18 and 20 years and that the security forces are now facing ruthless terrorists, while working within the rule of law, which I hope everyone in the House respects? Is it not extraordinary that certain apologists for the IRA always challenge the fairness of a guilty verdict in a British court against an IRA terrorist, yet are prepared to make wild and prejudicial—

Mr. Seamus Mallon:: On a point of order, Mr. Speaker. I regret that anyone should be described—

Mr. Speaker: Order. We cannot have a point of order in the middle of a question.

Mr. Kilfedder: The Attorney-General ought to be aware that the police in Northern Ireland can now go back to giving 100 per cent. of their attention to finding those ruthlesss terrorists who murder without mercy.

The Attorney-General: While I note the hon. Gentleman's satisfaction with the outcome of the Director's deliberation, with which I wholly agree, any Attorney-General or Law Officer who discharges his constitutional duty conscientiously must be as little moved by plaudits as by condemnation. I note what the hon. Gentleman says about the duty of the security forces—and of course he is right to say that they have dangerous tasks to discharge, but they have to discharge them, and will continue to discharge them, only in accordance with the law.

Mr. Simon Hughes: Is not the content of the Attorney-General's statement that there is evidence that RUC and CID officers perverted the course of justice; that, were it not for the national security considerations, they would have been prosecuted for those offences; and that, simply because of national security considerations, they have not been prosecuted, but if they had been prosecuted and convicted for those offences they would have received severe sentences of imprisonment? Therefore, the least that the community of the North of Ireland can now expect is that disciplinary proceedings be immediately undertaken and pursued to their proper conclusion. The paramount objective must be to restore confidence in the security forces in Northern Ireland, which this silent decision will have abysmally failed to do.

The Attorney-General: I do not wish to add to what I said in my statement to the House. Disciplinary proceedings are plainly not matters within my ministerial responsibility. They fall within the responsibilities of my right hon. Friend the Secretary of State for Northern Ireland. The hon. Gentleman will have heard that it is my right hon. Friend's intention to make a statement to the House at the earliest opportunity.

Mr. John Wheeler: While I welcome my right hon. Friend's honest and frank statement to the House — I am sure that among Conservative Members and, indeed, other hon. Members, there is widespread respect for his integrity in his judicial capacity for making decisions—nonetheless, is it not a fact that decisions to question people before the courts in this country rest on the provision of facts that could be presented and would lead to a conviction and that we must have regard to those facts as well as to the national interest?

The Attorney-General: I am grateful for what my hon. Friend said at the outset. On the second part of his question, of course he is right. He will recall that in my statement I said that the Director had concluded that there was insufficient evidence to warrant any further prosecution in respect of the three incidents at which killings occurred. I remind the House that four members of the RUC have already been prosecuted at the instigation of the DPP in respect of two of those three killings. It is only in relation to the only other offences disclosed or to the evidence suggesting those offences disclosed in the report, that bear upon perversion of the course of justice, that the Director has concluded that the public interest does not require prosecution.

Mr. Martin Flannery: Does not the Attorney-General realise that wheeling out expressions such as "economy" and "integrity" have no bearing on his own remoteness from the scene in Northern Ireland? Does he not realise that what he said today was so economical in the use of justice that it will itensify the violence in Northern Ireland; that the removal of Mr. Stalker and what that has caused to all kinds of people in our country, many of whom are not connected with Northern Ireland, has made everybody cynical about the Government's lack of real justice on the question of Northern Ireland? At this late stage, may I ask him to make another statement to give more hope, especially to the minority community, that there is some British justice in Northern Ireland?

The Attorney-General: I believe that the record of the criminal justice system in Northern Ireland should inspire confidence in the proper standards that obtain there and are applied. The hon. Gentleman chooses to overlook the fact--I remind the House again—that four members of the RUC have been prosecuted for murder in respect of two of the three killings. However, I must reject the assertion that I am wholly remote from Northern Ireland. I do not live in Northern Ireland but I make it my business to go to the Province as often as I can in the discharge of my responsibilities, being Attorney-General for the Province as well as for England and Wales.
Of course I acknowledge the need for confidence, but that does not mean that it would be right for me to waive the ordinary criteria for prosecution decisions and to take no regard of the public interest. That would not be in the interests of the people of Northern Ireland, nor, in the long run, would it sustain confidence in the system of criminal justice.

Mr. Ivor Stanbrook: Is my right hon. and learned Friend aware that the British constitution places him personally and ultimately in the seat of judgment on matters of this kind? Is he also aware that the House has complete confidence in his independence, integrity and judgment of the public interest?

The Attorney-General: My hon. Friend is absolutely right about the constitutional position. I am the ultimate prosecuting authority in England and Wales, and in Northern Ireland. In this case I gave no direction. Sir Barry Shaw took the decision, with which I wholly agree.
I am grateful for the latter part of my hon. Friend's comments. It is a confidence that any Attorney-General does his best to earn and he regards himself as constitutionally completely independent in matters affecting his judicial or quasi-judicial jurisdiction in criminal law.

Mr. Merlyn Rees: Is the Attorney-General aware that, in my view, we should read his statement carefully—listening is not enough--and we should return to it? Although it may be a trite thing to say, whatever the Provisional IRA does, or the Ulster Freedom Fighters, the Ulster Defence Association or anybody else, the men who serve the Crown and this country by working there, must always act in a superior way to those who seek to act not politically but by murder and killing? Therefore, if we question, it is not, as the hon. Member for North Down (Mr. Kilfedder) said, that one sympathises in any way with those who kill and murder.
I should like to make my view abundantly clear. I trust Barry Shaw implicitly. He is a fine man who has served Northern Ireland well and with complete independence from politicians of all parties. In any event, we must listen to the Secretary of State for Northern Ireland when he reports on matters that concern us—the mixed role of the intelligence services and the Army, and of the RUC and the Army proper down on the border, where something may well have gone wrong. It is the Secretary of State's job to report on that.
Much has been said about things going wrong on the border; it has been said that there were disagreements between arms of the security service and that there were disagreements between it and the growing special branch of the RUC. It is surely not in the national interest to cover up when something goes wrong. It is in the national


interest not to reveal matters that put people's lives at risk. The concern—it is a genuine concern—is that something went badly wrong and people acted in a way that was outwith the law. I want an assurance that there has not been a cover-up of that latter point.

The Attorney-General: First, I am extremely grateful for what the right hon. Gentleman said about the reputation of Sir Barry Shaw, the Director of Public Prosecutions, and his complete trust in him. That I acknowledge with much gratitude.
As to the Secretary of State, he will of course be coming to the House at an early opportunity to discuss and make a statement about those matters that fall within his responsibilities. He has for long said that he wishes to do so when it is open to him to do so, as it now is, with the prosecution decision question now resolved.
As to the question of a cover-up, may I make it absolutely clear that I agree with the right hon. Gentleman that the public interest is never to be equated with the interest of the Government or of the majority party, and is never to be prayed in aid to protect the Government from, for example, embarrassment, and it has not been in this case. I cannot conceive that I should ever be pressed by any member of any Government of any party; I do not believe that any Attorney-General has ever been pressed in that way. I certainly have not been pressed, and I would never so interpret the public interest. I can give the right hon. Gentleman that assurance.

Mr. Cyril D. Townsend: Is it not almost unprecedented for there to be a statement that there will not be a prosecution? Should not my right hon. and learned Friend therefore be most warmly congratulated on his courage in making his statement, when of necessity he has to operate with one hand tied behind his back? Will not he confirm that it is a long-established convention that the national interest should be taken into account? Would it not be a matter of grave concern to the House if that were not so?

The Attorney-General: I am grateful to my hon. Friend for what he has said. I know of one occasion on which a Law Officer has announced a decision not to initiate criminal proceedings. If we made a habit of it, it would take up rather a lot of time, but I thought it right in these circumstances to do so, by reason of the great interest that centres, quite properly, upon these matters.
As to the second part of my statement, I have already mentioned that the standard criteria which govern prosecution decisions require consideration of whether the public interest requires a prosecution. If I were to depart from those standard criteria in a case of this kind, or if the Director were to do so, we should not be serving the public interest.

Mr. Ken Livingstone: Does the Attorney-General agree that one cannot defeat terrorism by using the methods of terrorists, that his statement today will merely confirm the fears of millions of people in this country and abroad that Mr. Stalker was removed from his post because he was not prepared to go along with precisely this sort of cover-up, and that coming to the House with this sort of statement the Attorney-General has reduced himself and the office he holds to the level of an accomplice to murder—

Mr. Speaker: Order. The hon. Gentleman must not cast aspersions of that kind. He will rephrase that last comment.

Hon. Members: Withdraw!

Mr. Livingstone: Mr. Speaker, innocent men have been shot dead—

Mr. Speaker: Order. I give the hon. Gentleman an opportunity to rephrase that last comment. He must not cast aspersions of that kind against another hon. Member.

Mr. Livingstone: Mr. Speaker, I have the greatest respect for your position and your impartiality. But if the rules of the House prevent me from denouncing this cover-up and those who are complicit in it, the rules are wrong and I will not be bound by them.

Hon. Members: Withdraw!

Mr. Speaker: Will the hon. Gentleman please withdraw that last comment? He well knows the rules here—that we do not cast aspersions of dishonour across the Floor of the Chamber. Will he please now unequivocally withdraw that comment? I give him one last opportunity to rephrase his last comment.

Mr. Livingstone: I would not want anybody to come away from this discussion with the impression that hon. Members are not prepared to name those who have sat at the centre of government and covered up the murder of innocent Catholics year by year—

Mr. Speaker: Order. I give the hon. Gentleman one final chance— [HON. MEMBERS: "No."] — and if he refuses to take it I shall be forced to name him.

Hon. Members: Name him.

Mr. Speaker: I name the hon. Member; Mr. Ken Livingstone.

Motion made, and Question put,

That Mr. Ken Livingstone be suspended from the service of the House.—[Mr. Wakehaml]

The House divided: Ayes 166, Noes 19.

Division No. 151]
[4.15 pm


AYES


Adams, Allen (Paisley N)
Burns, Simon


Adley, Robert
Butler, Chris


Arbuthnot, James
Carlisle, John, (Luton N)


Arnold, Jacques (Gravesham)
Carlisle, Kenneth (Lincoln)


Ashby, David
Carrington, Matthew


Baldry, Tony
Chapman, Sydney


Banks, Robert (Harrogate)
Chope, Christopher


Barron, Kevin
Clarke, Rt Hon K. (Rushcliffe)


Beaumont-Dark, Anthony
Conway, Derek


Bell, Stuart
Coombs, Anthony (Wyre F'rest)


Bennett, Nicholas (Pembroke)
Coombs, Simon (Swindon)


Biffen, Rt Hon John
Corbett, Robin


Biggs-Davison, Sir John
Cormack, Patrick


Blair, Tony
Davis, David (Boothferry)


Blaker, Rt Hon Sir Peter
Devlin, Tim


Bonsor, Sir Nicholas
Dewar, Donald


Boscawen, Hon Robert
Dickens, Geoffrey


Bottomley, Mrs Virginia
Dicks, Terry


Boyson, Rt Hon Dr Sir Rhodes
Dixon, Don


Braine, Rt Hon Sir Bernard
Dorrell, Stephen


Brandon-Bravo, Martin
Douglas-Hamilton, Lord James


Brazier, Julian
Durant, Tony


Brittan, Rt Hon Leon
Fallon, Michael


Brown, Michael (Brigg &amp; Cl't's)
Fearn, Ronald


Browne, John (Winchester)
Field, Barry (Isle of Wight)


Bruce, Ian (Dorset South)
Forth, Eric


Bruce, Malcolm (Gordon)
Fox, Sir Marcus


Buck, Sir Antony
Garel-Jones, Tristan






Grant, Sir Anthony (CambsSW)
Neubert, Michael


Greenway, Harry (Ealing N)
Nicholson, Miss E. (Devon W)


Ground, Patrick
Oppenheim, Phillip


Hamilton, Hon A. (Epsom)
Page, Richard


Hannam, John
Portillo, Michael


Hargreaves, A. (B'ham H'll Gr')
Powell, William (Corby)


Hargreaves, Ken (Hyndburn)
Price, Sir David


Harris, David
Raison, Rt Hon Timothy


Hayes, Jerry
Redwood, John


Hayward, Robert
Rhys Williams, Sir Brandon


Hicks, Robert (Cornwall SE)
Ridley, Rt Hon Nicholas


Higgins, Rt Hon Terence L.
Robertson, George


Holt, Richard
Rogers, Allan


Hordern, Sir Peter
Ryder, Richard


Howard, Michael
Sackville, Hon Tom


Howarth, Alan (Strat'd-on-A)
Scott, Nicholas


Howarth, G. (Cannock &amp; B'wd)
Shaw, David (Dover)


Howell, Ralph (North Norfolk)
Shaw, Sir Giles (Pudsey)


Hughes, Robert G. (Harrow W)
Sims, Roger


Hughes, Roy (Newport E)
Skeet, Sir Trevor


Hughes, Simon (Southwark)
Smith, Tim (Beaconsfield)


Hunt, David (Wirral W)
Soames, Hon Nicholas


Hunt, John (Ravensbourne)
Speller, Tony


Ingram, Adam
Spicer, Sir Jim (Dorset W)


Irvine, Michael
Stanbrook, Ivor


Jack, Michael
Stanley, Rt Hon John


Janman, Timothy
Stern, Michael


Jones, Robert B (Herts W)
Stewart, Andrew (Sherwood)


Jopling, Rt Hon Michael
Stott, Roger


Kaufman, Rt Hon Gerald
Stradling Thomas, Sir John


Kellett-Bowman, Mrs Elaine
Sumberg, David


Key, Robert
Summerson, Hugo


Kilfedder, James
Tapsell, Sir Peter


Kinnock, Rt Hon Neil
Taylor, Ian (Esher)


Knowles, Michael
Taylor, John M (Solihull)


Knox, David
Taylor, Matthew (Truro)


Lang, Ian
Tebbit, Rt Hon Norman


Lawrence, Ivan
Thompson, Patrick (Norwich N)


Lightbown, David
Thorne, Neil


Lloyd, Peter (Fareham)
Thurnham, Peter


Lyell, Sir Nicholas
Townsend, Cyril D. (B'heath)


McNamara, Kevin
Twinn, Dr Ian


Mans, Keith
Waddington, Rt Hon David


Maples, John
Wakeham, Rt Hon John


Marlow, Tony
Walker, Rt Hon P. (W'cester)


Marshall, John (Hendon S)
Waller, Gary


Martin, David (Portsmouth S)
Ward, John


Mates, Michael
Watts, John


Maxwell-Hyslop, Robin
Wheeler, John


Mayhew, Rt Hon Sir Patrick
Widdecombe, Miss Ann


Michael, Alun
Williams, Rt Hon A. J.


Michie, Mrs Ray (Arg'l &amp; Bute)
Yeo, Tim


Miller, Hal
Young, Sir George (Acton)


Mitchell, Andrew (Gedling)



Morrison, Hon P (Chester)
Tellers for the Ayes:


Moss, Malcolm
Mr. Mark Lennox-Boyd and


Neale, Gerrard
Mr. David Maclean.


NOES


Boateng, Paul
Primarolo, Ms Dawn


Bradley, Keith
Roberts, Allan (Bootle)


Dalyell, Tam
Salmond, Alex


Fields, Terry (L'pool B G'n)
Sedgemore, Brian


Flannery, Martin
Thomas, Dafydd Elis


Heffer Eric S.
Vaz, Keith


Livingstone, Ken
Wai ley, Ms Joan


McAllion, John



Mahon, Mrs Alice
Tellers for the Noes:


Meale Alan
Mr. Dennis Skinner and


Mullin, Chris
Ms. Diane Abbott.


Patchett, Terry

Question accordingly agreed to.

Mr. Speaker: I direct the hon. Member for Brent, East to withdraw from the House in accordance with the order which the House has just made.
The hon. Member withdrew accordingly.

Mr. Robin Corbett: On a point of order, Mr. Speaker. I am sorry to detain the House, but it was within my hearing and that of my hon. Friends the Members of Linlithgow (Mr. Dalyell) and for Pontefract and Castleford (Mr. Lofthouse) that, immediately following your calling my hon. Friend the Member for Brent, East (Mr. Livingstone), the hon. Member for Cambridgeshire, South-West (Sir. A Grant) said, "Here comes the IRA " Would it be in order for you to ask him to withdraw that remark?

Mr. Speaker: I did not hear anything of that. In matters of this kind, it is far better to leave the situation as it is. Such incidents do not do much for the reputation of this place.

Mr. Tony Marlow: On a point of order, Mr. Speaker. Is it your intention to cont nue with the statement before taking further points of order?

Mr. Speaker: I sense that it is the wish of the House to move on.

Mr. Tam Dalyell: Further to the point of order, Mr. Speaker. Would it not be better in these circumstances for you courteously to ask the hon. Member for Cambridgeshire, South-West (Sir A. Grant) whether he said any such thing?
His comment was within the clearest hearing of many of us. Indeed, it was a very goading remark. Did the hon. Gentleman say it, or did he not?

Mr. Speaker: Did the hon. Member say it?

Sir Anthony Grant: I certainly intended to say, "Here comes the apologist for the IRA." If you ask me to withdraw, Mr. Speaker, of course I shall do so completely.

Mr. Speaker: The Clerk will now proceed to read the Orders—

Mr. Marlow: On a point of order, Mr. Speaker. Increasingly, the House has been confronted with a procession of Opposition Members who seek to enhance their publicity value by being thrown out of the Chamber. This has gone on far too long. I ask whether we may take action through some of the procedures of the House so that something is done to restrain this form of misbehaviour misbehaviour which takes place without any known penalty for the offender.

Mr. Speaker: The penalties are laid down in the Standing Orders. Whether they should be increased is a matter for the Procedure Committee.

Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. I put it to you that to terminate a statement in the way that you have done has implications for future statements where an hon. Member may wsh to intervene, for whatever reason, and interrupt our proceedings.

Mr. Speaker: Order. The reason that I made that comment is simply that no fewer than 24 hon. Mernbers wish to take part in the next debate, and I feel that I must have consideration for those who have a legitimate right to the time of the House. Unfortunately, the action that I have just had to take takes time.

Mr. Ron Leighton: On a point of order, Mr. Speaker. Can you explain why an incident of this kind truncates questions on a statement?

Mr. Speaker: I have just explained that very matter. There is a further statement to follow and, as always, I shall have regard to those who are not called for this statement on the next occasion.

Mr. McNamara: On a point of order, Mr. Speaker. May I say that I regretfully support your decision on this matter? Had I had the opportunity, I would have liked to make a statement about the full support of the Opposition for the Director of Public Prosecutions. The matter that is in question is the Attorney-General and the pressures that he brought to bear upon him. In the circumstances, however, and because we note the pressures on you and on other hon. Members, the Opposition will not press for debate on the matter to continue.

Orders of the Day — Regional Development Grants (Termination) Bill

Order for Second Reading read.

Mr. Speaker: Before I call the Chancellor of the Duchy of Lancaster, let me repeat that no fewer than 24 right hon. and hon. Members have already indicated their wish to take part in this important debate, many of them with a direct constituency interest. Today is another day on which short contributions would enable the majority of them to be called.

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): I beg to move, That the Bill be now read a Second time.
The subject of the Bill is the closure of the regional development grants scheme, which was introduced under the Industrial Development Act 1982, as substituted by the Co-operative Development Agency and Industrial Development Act 1984. The transitional arrangements for running down the earlier RDG scheme are not affected by the Bill.
The current RDG scheme operates in the development areas of Great Britain. It enables grant to be paid automatically to projects that qualify under the rules of the scheme. Subject to certain limits, grant is normally 15 per cent. of the value of an investment project, or £3,000 for each new job created by the project, whichever is the higher.
Clause 1 removes the power to make grants for projects, unless applications are received on or before 31 March 1988. Clause 2 places restrictions on the availability of grants for projects in respect of which applications for approval are received after 12 January 1988, except where applications are in respect of projects started on or before that date.
The restrictions are of two kinds: broadly, time limits on counting jobs and assets for grants, and constraints on variations of the project. First, grants will be payable only on jobs and assets provided, or money spent on assets, within two years of the project's approval date, and for which a claim is received within three years of that date, or any earlier date specified in the approval. Secondly, grants will not exceed the total amount specified in the approval, regardless of subsequent changes in the project.
The Bill is one part only of the package of changes in industrial policy that I announced to the House on 12 January. In introducing these changes, it was the Government's aim to strengthen and modernise regional policy, and to bring it up to date with the economic conditions of 1988. I have always been committed to the idea of a strong regional policy, and I remain so. Any disagreement in the House is therefore about the most effective instruments of policy to continue to improve the economy of the assisted areas. The debate is about how best to create the conditions that will speed up job creation in the north, the west midlands, the south-west, Scotland and Wales. The Government are as determined as ever to see all our people share in the nation's rising prosperity and new-found business confidence.
We are changing our regional policy to make it more effective, and to concentrate all our efforts and resources on encouraging new and lasting business growth. However, another difference between the Government and some of our critics is that we aim to use regional policy to change and modernise the industrial economy of the north, Scotland and Wales. A few of our opponents—I am glad to say that the number is declining—still devote most of their efforts to attempts to conserve the old heavy industrial economy which brought prosperity to past generations in the oldest industrial areas. —[Interruption.]—I said that it was a declining number. I am glad that the reaction on the Opposition Benches shows that the light is spreading ever more widely.

Mr. D. N. Campbell-Savours: rose—

Mr. Clarke: I shall give way way in a second. I have only a short time, so shall not give way throughout my speech.
Heavy manufacturing industry can, of course, prosper again nowadays if it becomes more competitive and efficient, as much of our heavy manufacturing industry has done. Look at the success of British Steel, Nissan and Jaguar. However, those industries will never again become mass employers sustaining whole cities, and we need to attract the full range of business activity around them. The north needs businesses as varied and as strong as those that are thriving in great numbers in the south. The north does not want a preserved and subsidised economy, or a weak, branch-line economy. We are creating in the regions an economy that is ever more similar to the thriving economy of the south-east, capable of selling goods and services in today's markets.

Mr. Tony Blair: If the Minister is telling us that the purpose of the existing scheme of industrial support is simply to conserve the traditional industries, can he tell us which of the firms in, for example, the north, Wales and Scotland that are in receipt of regional development grant are simply traditional industries that have outlived their usefulness?

Mr. Clarke: I am describing regional policy as a whole. I was putting forward what I consider the incontrovertible fact that some of our critics in the north and Scotland still devote most of their efforts to trying to conserve the old industrial economy, for understandable reasons. The old industrial economy of the north is being modernised, and the great industries of Scotland and Wales are becoming more competitive. Many of them have shed labour as a result.
The Government's aim in regional policy — I hope that it has the support of the more enlightened Opposition Members is to change the fundamental basis of the northern economy, so that alongside more competitive heavy manufacturing is the full range of service and manufacturing industries, as good and as strong as those in the south.

Mr. Tony Baldry: rose—

Mr. Clarke: I shall give way only once more. The point that I am being pressed on is this: it is being said that what I am saying is now widely accepted, and that Opposition Members agree with me that the basis of the economy in Scotland and the north must change. If there is not a fundamental difference between us, I shall not dwell on the subject.

Mr. Campbell-Savours: Is the Minister aware that west Cumberland has willingly entered into the exercise that he describes over the past few years? It has seen the rundown of older industries, and the development of new businesses. However, the development authorities for the area now say that in the event that the money is cut off in the way that the Minister suggests, that process of rebirth will come to an end. Why is he doing it now, when we are getting into gear and beginning to develop a new industrial base in the west of the country?

Mr. Clarke: If the hon. Gentleman's development authority is under the impression that we are cutting off the money, that is a misconception that I shall be able to correct when I reach the part of my speech that deals with the Government's expenditure.

Mr. Baldry: Does my right hon. and learned Friend agree that the only division in the House and the country on the issue is between those who understand how an enterprise economy works, and those who do not?

Mr. Clarke: I agree. However, it is possible that a new realism is dawning among those on the other side. Time was when their main aim was to preserve such industries as steel and shipbuilding exactly as they were. The present more modern and efficient steel industry, and the success of some of the car manufacturers, shows the achievement of our enterprise policy approach, both in manufacturing and in other sections of the economy.
We are changing the nature of our regional policy—while not reducing the emphasis that we give to it — to reflect the changing economic climate in the regions, and in the country as a whole.

Mr. Ted Rowlands: Will the Minister give way?

Mr. Clarke: No, I must get on. If I give way as frequently as this throughout my speech, we shall never fit 24 speakers into the debate, as you, Mr. Speaker, have reminded us.
We are no longer trying to protect the assisted areas against the worst of a recession, because we have emerged from that. Investment is rising very strongly in service and manufacturing industry. The most recent DTI survey of investment intentions in the United Kingdom predicts a further increase of 11 per cent. in manufacturing investment in 1988. The number of jobs is rising. Unemployment is falling particularly rapidly, and I am glad to say that it has been falling faster in Wales, the midlands and the north than elsewhere. In those changed circumstances, regional policy has to change to continue to be effective.
Regional development grant is the direct descendant of the oldest standing approach to regional policy It provided a virtually automatic subsidy to all capital investment in manufacturing or service projects in development areas in England, Scotland and Wales. RDG required no prior assessment about whether a project was viable, or whether it needed the money to go ahead.
The nature of the scheme meant that, inevitably, many grants were paid to companies which would have proceeded with their projects without any Government grant. Decisions about regional location for such companies were often, therefore, not affected by the availability of RDG itself. Sir John Harvey-Jones, ex-chairman of ICI, has made speeches saying that that was


the case, for quite a large number of the grants paid to his company using RDG. It clearly does not add up to the best use of public money for the benefit of the regions or the national economy.
The scheme also operates without requiring companies to produce any supporting financial information for their project. We all know that this has meant that some of the projects supported by RDG have been ill-conceived in that either the project, or even the company itself, has not been commercially viable. When companies that received grants subsequently fold and go away from assisted areas, Opposition Members rightly are the first to complain.
Therefore, RDG has been an expensive scheme so far. It would be bound to become even more expensive if we kept it, now that the economy of the regions is expanding so fast. We wish to change the use to which the money is put, and RDG is bound, by its very nature, to absorb an increased proportion of our budget, once investment takes place of its own volition in the regions. That is inevitable with such an automatic scheme. If we use RDG as our main instrument of policy, the better companies do, the more they invest, the more the Government have to spend automatically. In my opinion, we should not be subsidising profitable and successful companies to make investments that they would have made, anyway.

Mr. Malcolm Bruce: I understand the Minister's point about the need to ensure that the money is targeted effectively, but the reason for introducing changes to put a limit on the cost per job was to prevent such waste. Does the Minister accept that it is not the time for change yet again, because constant changes depress demand?

Mr. Clarke: The last changes that were made put a ceiling on the amount of grant available by linking it to the jobs created, but the automatic element was retained. No defender of automatic grants can deny that investment decisions which would have been taken anyway automatically attracted capital subsidy, when that subsidy made no difference to the decision of the investor. Expansion in the regions has been so rapid, and investment has proceeded so strongly, that more and more money has been drawn automatically to support investments that would have gone ahead anyway.

Dame Elaine Kellett-Bowman: People in Lancaster are delighted with the proposal. We can hold our own, level pegging, but we find it difficult to hold our own if people are bribed to go elsewhere.

Mr. Clarke: I am explaining why the Government do not think that people should automatically be subsidised to go elsewhere. I shall come to the way in which we shall make use of resources selectively to subsidise, where a case has been made—

Several Hon. Members: rose—

Mr. Clarke: I shall give way once more and then decline to give way any further.

Mr. Barry Field: Regional grants have done considerable damage to my constituency and have enticed one company to Wales. Despite the fact that it received regional grants, there is still not a great deal of technical expertise in Wales, and they still have some of their work done on the island. Is my right hon. and learned

Friend able to console constituencies that do not receive regional aid by an assurance that the Bill will make it less likely for companies to be seduced away?

Mr. Clarke: I cannot give my hon. Friend the complete assurance that he seeks. It is of the nature of a regional policy that it seeks to attract people to invest in regions where otherwise they may not go. My constituency has never received regional aid, and that causes considerable distress to companies that compete with companies in the regions but do not receive the same grant. I am sure that many companies in the Isle of Wight and in Nottinghamshire will accept that the Government are committed to a regional policy whereby public money must be spent to affect investment decisions and that there is a case for that. Under RDG, competitors with companies in the Isle of Wight are, in any event, investing in the north, because they are doing well in the market, and are able to raise the capital and receive a 15 per cent. subsidy because they happen to be there. That is rightly seen as unfair competition with companies in the south.
If we are to devote public money to sustain the improved economy in the regions, we must do that in a way that can be justified, by ensuring that it is used to make things happen that would not otherwise happen in Scotland, Wales, the north and the south-west.

Mr. Tony Speller: Does my right hon. and learned Friend consider that there is considerable unfairness, with discrimination across a county? For example, Plymouth is an excellent city, with good roads and rail services, air and sea communications and no unemployment, whereas across the county, at Ilfracombe, there is 28 per cent. unemployment and none of those advantages? We are unintentionally attracting investment away from where it is needed and towards where it already exists.

Mr. Clarke: It is of the nature of any regional policy that there are boundaries. Any Minister who has had responsibility for regional policy knows that boundaries give rise to endless disputes and some unfairness to districts that are just outside the assisted areas. Many parts of the south-west benefit from the Government's regional policy, but it is always difficult to know where to draw the line, and it causes rivalries and competition in Devon and elsewhere.
I hope that I have explained that we are ending RDG because the economy has expanded so rapidly that companies in the north and in Scotland are able to raise capital more readily, and there is less need than ever before for the automatic subsidy that the RDG represents. The time has come to bring to an end a system that gives a grant regardless of need and commercial viability and to rely more on selective assistance and the new enterprise initiative that I shall describe.
Before I describe the alternative policy, I shall help the House by describing the detailed arrangements for winding down the RDG scheme. Firms in the constituencies of right hon. and hon. Members will wish to know upon what basis they can apply for RDG and what will happen to RDG applications that are already in the pipeline.
The detailed arrangements for winding down the RDG scheme are, we believe, fair and reasonable. We announced the closure of the scheme on Tuesday 12


January. The closing date for applications is 31 March 1988. Firms therefore have two and half months notice of the closure.
We have taken care to exclude from the restrictions operating after 12 January firms whose project plans were made or being implemented before the announcement of the end of RDG. Firms whose applications have been received on or before the date of the announcement will be unaffected. So will firms whose projects had started on or before that date, provided that their application is received by the closing date of 31 March 1988.
Even in those cases which are affected by those transitional arrangements, the restrictions are unlikely to change the course of the planned project. Firms will have two years from the date of project approval in which to complete their projects. More than 90 per cent. of projects by number which have benefited from the scheme in the past were to be completed within two years, so we believe that two years is the right time.
We shall make use of regional selective assistance to give grants to firms which apply in future for projects which genuinely require grant to make a difference to their location or to make them go ahead at all. Regional selective assistance, unlike the automatic grant system, requires companies to show that they genuinely need public money to proceed with a project. It will continue to be available and the maximum amount payable will continue to be higher in development areas than in intermediate areas, as before.
Projects which up to now have qualified for RDG will be eligible for RSA. Companies — both domestic and foreign — that meet the criteria for the scheme could indeed well receive more by way of RSA for the project to go ahead than they would previously have received from RDG. Let me add that we are making more money available for regional selective assistance to meet the higher demand for it. However, we shall, of course, be applying the criteria rigorously to make sure that the taxpayer gets maximum value for his money.

Mr. Eric S. Heffer: Will the right hon. and learned Gentleman give way?

Mr. Clarke: I said that I could not keep giving way.
Regional selective assistance is open to all companies in industry, whether British or foreign. Therefore—this is an important point — we shall continue to attract internationally mobile projects to this country as at present. Let me make it clear—some people have been worried about this — that our policy on inward investment has not changed. The Government welcome inward investment and aim to build on the considerable success that we have had in attracting overseas investment to these shores.
I believe that the availability of grants usually plays only a relatively small part in attracting most of the foreign companies that come to Britain. We are being so successful at the moment because overseas investors are impressed with our good industrial relations, the general economic climate, the good infrastructure and communications and the quality of the staff. I accept completely that grants sometimes come into the equation. We do not want to be put at a disadvantage when compared with other countries that offer grants to attract internationally mobile projects and we shall use RSA and our other grant-giving powers to ensure that we are not.
Judging from some of the comments when I made my statement and some of the comments in the newspapers afterwards, the fact that we are now relying on selectivity has given rise to some of the controversy about what otherwise is just a change in our main instrument of regional policy. I am a little amused and rather amazed that the retention of RSA has suddenly aroused a small debate about how selectivity works. After my statement one of my officials pulled my leg when I returned to the Department by asking about the new powers that we were taking to enable civil servants such as himself to exercise the duty of picking winners again. [Interruption.] I think that my right hon. Friend the Member for Chingford (Mr. Tebbitt) accepts what I am about to say.
We are planning to spend more money on RSA but we are not changing it at all. Regional selective assistance has been in existence since the 1970s. As far as I am aware no one has criticised the way in which is has operated; certainly not for the last year or so. If anyone suddenly wants to criticise it now, I will, of course, listen. However, perhaps critics should first understand exactly how RSA works.
Any company may apply. All applications have to be assessed objectively against published criteria to establish whether the project would go ahead without public money. Private sector expertise plays the key part in this assessment. All offers over £100,000 are submitted to industrial development advisory boards made up of senior, experienced business men. Ministers and our officials do not, sad to say, "play God". We do not even decide whether a project should or should not go ahead. It is our job to judge how much money is necessary to enable a project to go ahead that would otherwise not go ahead. But it is the company that takes the initiative and the final decision whether to go ahead with the project.

Mr. Heffer: On the matter of criteria, is it question of viability? Who will determine the viability of a future product? That is the important question. Will the right hon. and learned Gentleman answer? When I was a Minister in the Department of Trade and Industry that gave us more headaches than any other question.

Mr. Clarke: The criteria are published. They are clear and, as far as I can recall, no one has raised a question to challenge them; certainly not over the past year or so. When the hon. Gentleman was a Minister in the Department, regional selective assistance was being operated by him. The main difficulty that used to arise in the time of the Labour Government was that the business men used to give their advice and judgment about the validity of the schemes being put forward and Ministers—I do not know whether it applies to the hon Member for Liverpool, Walton (Mr. Heffer) but it applies to his right hon. Friend the Member for Chesterfield (Mr. Benn) who I think was the Secretary of State—were in the habit of overruling the advice of business men and forming their own opinion.

Mr. Campbell-Savours: Absolute twaddle.

Mr. Clarke: It is not absolute twaddle. I shadowed the right hon. Member for Swansea, West (Mr. Williams) who was slightly more respectful towards industrial develop-ment advisory hoards. He understands the system I am describing, which is that operated by the previous; Labour Government. However, when the right hon. Member for


Chesterfield was Secretary of State, he did not have the same respect for private sector expertise and neither, I suspect, did the hon. Member for Walton. That is what caused the difficulty for the previous Government. Private sector judgments were overruled by Ministers. That is not usually the case with this Government, certainly not in terms of giving grants to projects that business men say are not viable.

Mr. Alan Williams: Will the right hon. and learned Gentleman bear in mind that he is talking absolute rubbish? I administered regional selective grants for the last three years of the previous Government and I did not once overrule the industrial development advisory boards. Will he also bear in mind that the Government of which I was a member used RSA to help bring in Hoffman La Roche, Hitachi and so on? We used it for inward investment. Since RSA is so marvellous and is a system that the Government support, why is the level of RSA now 37 per cent. lower than it was when I administered it?

Mr. Clarke: I accept that the right hon. Gentleman may not have overruled the industrial development advisory boards. However, he was not the only Minister in the Department during the last Labour Government. I will not use the material held by my hon. Friend the Minister of State, Scottish Office. I believe that he is sitting here with quotations concerning the time of the previous Labour Government. One of the then Secretaries of State made a virtue of the fact that he overruled his business advisers when giving out grants. No doubt the hon. Member for Walton approved of that at the time. The difficulty the Labour Government faced was that they gave grants to ill-conceived projects that business men advised against.
When I shadowed the right hon. Member for Swansea, West, I supported some of the bids to which he referred. I remember the Hoffman La Roche case. I did not criticise regional selective assistance. It was used to attract inward investment and it can still be done. For that reason I do not understand why the Opposition are raising doubts about our choice of this instrument now. The cost has gone down because much of the investment in those days was purely capital investment, which sometimes cost jobs and certainly did not create jobs on an adequate scale. The first step the present Government took was to relate the level of grant more closely to the number of jobs created. I would have thought that that was the principal objective of policy. That has had the effect of reducing expenditure compared to a few years ago.

Ms. Hilary Armstrong: The reality is that the people in the north do not trust the Government because in the past 10 years we have lost over half our percentage of national regional aid. It used to be 32 per cent. and it is now 16 per cent. Under selective assistance we have lost £15·5 million since the previous Labour Government were in office. The Government have given no guarantees about what they will do to maintain the level of income to the north, let alone increase it.

Mr. Clarke: I am, as ever, seeking to dispel distrust. We have reached the stage in my argument when I am pointing out that we are changing the instruments of regional policy but not changing its essential nature or aims. We are replacing automatic grants because they are becoming

steadily more expensive and wasteful as investment takes off of its own volition in the north, Scotland and Wales. We are replacing it with a reliance on regional selective assistance, which, as far as I understand, Opposition Members do not attack as an instrument of policy. I shall return to the quantity of aid.
I have already explained that we have seen a drop in expenditure because we are now relating the grant to the number of jobs created. However, the change in policy of which the Bill is a part is not part of any planned cutback in expenditure. I will make that clear when I reach that part of my speech.

Mr. Blair: May I remind the Minister that we are not debating whether to continue regional selective assistance —we agree with continuing that—but whether it is right to abolish and terminate regional development grants? Is the Minister saying that when regional development grant ceases to be paid, regional selective assistance will grow sufficiently to take that up?

Mr. Clarke: When I reach that part of my speech, which I shall reserve until I have described the entire policy, I shall say that we are increasing planned expenditure for the three years of the White Paper period compared with last year's plans. We expect a higher take-up of regional selective assistance because of the ending of regional development grant. Spending will vary, because, when there is an overlap between commitments on RDG and the new RSA, there will be a sudden surge of spending and it will then decrease again. But the total spending period plan exceeds the one that we published last year.
We are talking about a change in expenditure from automatic grant to selective grant, but it must be seen alongside the other policy changes that we have announced.
An important new feature of our policy is the enterprise initiative. I shall explain the contribution that it will make to strengthening business and industry in the regions. The aim of the enterprise initiative is to encourage and help entrepreneurs and managers to make their businesses stronger and more competitive. Small firms often find it difficult to make the leap to becoming a big business because they lack the management time and experience to tackle their problems and identify their opportunities. That applies across the country, but it is even more crucial in the regions where, more than anywhere, we need to facilitate the growth of new strong businesses, not weak shadows of those in other areas.
We intend to help small and medium-sized firms to improve their performance in marketing, design, quality and advanced manufacturing methods. We are encouraging firms employing up to 500 people to take expert advice in those key areas. We are offering two days' free consultancy and up to 50 per cent. of the subsequent consultancy costs for between five and 15 days.
That will be the position in most areas, but the aim of the initiative, and the need to strengthen the performance of companies, matters even more in the less prosperous areas. Therefore, we will pay two thirds of the consultancy costs in assisted areas and in urban programme areas, compared with one half in the rest of the country. Overall, during the next three years, we shall be providing about £250 million to encourage firms to take advantage of the initiative. The early signs are that they are anxious to do so. So far, 14,500 people have telephoned our enterprise initiative number to ask for more details.
That is an important change, because as an instrument of policy we are considering not just the subsidy to capital investment, which has been the mainstay of regional and most of industrial policy, but the provision of other forms of support to improve the quality of management and the quality of product turned out, especially by small and medium-sized firms.
Development areas will benefit from two new schemes offering grants for investment and innovation to firms employing fewer than 25 people. They will be able to apply for investment grants of 15 per cent. towards the cost of fixed assets, up to a maximum of £15,000, and innovation grants of 50 per cent. for product and process development, up to £50,000. We have targeted those new grants on very small firms in the development areas because those areas are most in need of an additional stimulus to growth. Firms of the size that we have chosen are often at a crucial and vulnerable stage of business development, where they need to strengthen management skills and to find a more secure financial footing.
I trust that I have satisfied the House that we are keeping special regional incentives in place. We are changing and improving them. They will still be based on the existing assisted areas map, with the addition that the higher level of enterprise initiative grant will be paid in the inner cities, too. This is the first time that we have given such a grant in the cities and outside the assisted areas.
To deal with the point made by my hon. Friend the Member for Devon, North (Mr. Speller), I should say that we have made no change to the assisted areas map because a full review of the boundaries would be very complicated and time-consuming. We estimate that a full review of all the boundaries would take up to two years to complete. Any revision of boundaries must obtain the consent of the European Community, for the legitimate reason that some countries may extend their assisted areas to take advantage of other member states in the open European market. It was not feasible for us to embark upon a review so soon after the one conducted about three years ago, and we shall not embark on one until we see how the new policies settle down.

Mr. William Powell: I understand what my right hon. and learned Friend says about the general review and the national map, but he will be aware that unemployment in the assisted area in my constituency is several percentage points lower than in any other assisted area and lower than that in many non-assisted areas. Why is it impossible to carry out a limited review which would correct an anomaly that can only increase between now and 1990?

Mr. Clarke: My hon. Friend will admit that the problem arises because of the success in attracting new industry to Corby. The moment that those who take advantage of what is on offer in an assisted area are successful, anomalies develop round the borders of the map. My hon. Friend the Under-Secretary of State considers individual cases and receives many deputations. My hon. Friend the Member for Pudsey (Sir G. Shaw), who used to carry out that duty, will remember people coming to see him trying to extend the boundaries of the assisted area. That is not a feasible way of handling the matter, and in due course we shall need another full review. But my hon. Friend the Member for Pudsey carried out a comprehensive review three years ago and it will be some time before we get around to another one.

Mr. Alan Williams: The House will be interested to know how small firms in the development areas will be better off under the new scheme, receiving 15 per cent. of capital costs up to a ceiling of £15,000—that is £600 a job—when under the present scheme they could also get 15 per cent. of capital costs at £3,000 a job. How can it be a better deal for them if they get one fifth as much money as now?

Mr. Clarke: The nature of the scheme is different. The 15 per cent. is a straight subsidy to capital investment. The new grants that we shall give small firms retain an element of subsidy to capital investment, but include support for introducing investment in new technology into their production. That is a feature of all our policies. It is no good measuring these things in terms of the subsidy to capital investment. Capital investment alone does not determine success. We must examine how a firm keeps up with modern technology, the quality and design of its products and its general management performance to determine how well it will succeed in the market place.
Before the debate, some hon. Members asked me what assistance is available in different areas, and it might help if I gave a resume of what will be available under the proposals in the Bill and when our new package is put into effect in the assisted areas.
The new arrangements will mean that in development areas firms will be eligible for regional selective assistance, up to a higher maximum than in intermediate areas; for subsidised consultancy of up to two thirds of the cost, compared with up to 50 per cent. outside assisted areas; and, from April, the new innovation and investment grants which will be available to firms employing fewer than 25 people. In the intermediate areas, there will be regional selective assistance and subsidised consultancy of up to two thirds of the cost, again compared with up to 50 per cent. outside the assisted areas. In urban programme areas, there will be subsidised consultancy of up to two thirds of the cost. For non-assisted areas-the rest of the country—there will be subsidised consultancy, under the enterprise initiative, of up to 50 per cent. of the cost. That is the package. It is a sensible change, a response to changing economic circumstances now that the country is doing better and a response to the changed needs in the regions.
Many hon. Members, including the hon. Member for Durham, North-West (Ms. Armstrong), will suspend their judgment until they have heard how much we shall spend in the assisted areas after the changes have been made. I should make the position clear. We want an effective regional policy, so we shall make available the necessary resources. Our plans confirm what I have been saying during the past few months about our review. This is not part of cutting public expenditure.
The public expenditure White Paper published last Wednesday shows that our plans for spending on regional policy schemes will be higher than we planned in last year's White Paper. In England we are planning to spend about £900 million over the next three years, compared with last year's White Paper figure of about £700 million, based on the regional expenditure figure revalued in line with inflation into 1990–91.

Mr. Blair: Will the right hon. and learned Gentleman give way?

Mr. Clarke: The regional programmes of my right hon. and learned Friend the Secretary of State for Scotland and my right hon. Friend the Secretary of State for Wales similarly show an increase over earlier published plans.

Mr. Blair: Will the right hon. and learned Gentleman accept that the reason why the sums in the White Paper remain constant or rise slightly is that over the next few years considerable amounts of regional development grant will still be paid? Will he not accept that the true comparison will be made when regional development grant ceases to be paid in 1991? Will there be an increase in regional selective assistance to make that up? That is the key question.

Mr. Clarke: I have already said that the pattern of spending is affected by the overlap between commitments on RDG and the new increased spending on RSA. I agree that this coming year's spend appears artificially inflated by the overlap between the two. However, it will revert to more normal spend. Nevertheless, compared with previously published plans, the effect is an increase in DTI expenditure in each year.
For 1987–88 we are currently working on an outturn of £254 million compared with the published estimate in the White Paper of £222 million. In 1988–89, DTI spend on regional aid will increase to £330 million compared with last year's White Paper figure of £235 million. The figure for 1989–90 will be £304 million, compared with last year's published figure of £226 million. The figure for 1990–91, in response to the hon. Member for Sedgefield (Mr. Blair), is £264 million. The figure published in last year's White Paper when inflation is taken into account is £232 million. The figures that I have given are higher than those extrapolated from last year's White Paper.

Mr. Blair: rose—

Mr. Clarke: The figure is still £264 million compared with £254 million.

Mr. Kenneth Hind: Will my right hon. and learned Friend make it clear to all, especially to those of us who represent development areas, that provided projects are available and acceptable to his Department, the amount of money going into the development areas — the assisted areas around the country—will increase rather than decrease?

Mr. Clarke: Certainly. The White Paper figures that I have given show that the figures are rising when compared with the published and expected figures last year.

Mr. Blair: Will the right hon. and learned Gentleman give way?

Mr. Clarke: I will reply to one hon. Member at a time.
Once we examine the figures that I have described, it is obvious that much of the expenditure depends on the response to the programmes. We are estimating how much we shall spend on regional selective assistance and we have said what we intend to spend. We have estimated what we shall spend on the new enterprise initiative, but we have no idea of the actual take-up. We have only guesstimates about the response to the enterprise initiative in the assisted areas. Hon. Members who have time to watch television will know that we are promoting the enterprise initiative and the availability of grants to the businesses that we intend should benefit in the assisted areas.
We have stated our intention in our spending plans to spend that amount of money if economic circumstances and the response of business men are as we anticipate and if business men come forward for the grants.

Mr. Blair: rose—

Mr. Clarke: I want to make it clear that the figures that I have given cover spending on regional selective assistance, the new grants for small firms investment and innovation and regional development grant applications made on or before 31 March 1988. However, the figures that I have given do not include provision for the consultancy grant under the enterprise initiative.

Mr. Blair: Why?

Mr. Clarke: Because it is available at a higher rate in the assisted areas. There is an extra provision in those areas. If we provide a higher rate of grant, there must be a regional aspect to the spend and that must be added to any final calculation about regional spend once we know the outturn. Nor do the figures that I have given include the grant-in-aid paid to English Estates for building industrial and commercial premises in the assisted areas in England and the Scottish and Welsh equivalents.

Mr. Blair: Will the right hon. and learned Gentleman give way?

Mr. Clarke: I will not give way now, but I will give way in a minute.
As Opposition Members are pressing me on the figures, I should give the figures for English Estates as they are a key part of the regional policy. I will not intrude on spending in the Welsh Development Agency and the Scottish Development Agency. Those figures are extremely good and my right hon. Friend the Secretary of State for Wales would gladly give the Welsh figures and similarly my hon. Friend the Minister of State, Scottish Office will address the same points with regard to Scotland when he replies later.
We are planning to spend on English Estates—

Mr. Bruce Milian: Will the right hon. and learned Gentleman give way?

Mr. Clarke: No, I do not believe that the right hon. Gentleman is the right man for me to give way to in regard to English Estates. I might have given way to him on other aspects of regional policy, but not on English Estates.

Mr. Blair: rose—

Several Hon. Members: rose—

Madam Deputy Speaker (Miss Betty Boothroyd): Order. Is the Minister giving way?

Mr. Clarke: No, Madam Deputy Speaker. I want to respond to questions about English spending. I will not give way to a Scottish Member before I have given all the figures.

Mr. Blair: Will the right hon. and learned Gentleman give way?

Mr. Clarke: No. Labour Members are trying to mount opposition to these points on a variety of grounds. They cannot complain about the instruments of policy. They are trying to complain about spending, but they will not listen to the figures.

Mr. Blair: That is irrelevant.

Mr. Clarke: The hon. Gentleman cannot claim that spending on English Estates is irrelevant to his argument. It may destroy his argument, but it is not irrelevant.

Mr. Blair: Give way.

Mr. Clarke: No, I will not give way.

Several Hon. Members: rose—

Madam Deputy Speaker: Order. The Minister has made it clear that he will not give way.

Mr. Clarke: If the hon. Member for Sedgefield will listen to me, he will understand that the reason why I wanted to refer to English Estates is that I have made it clear that the figures that I gave earlier did not include English Estates. If the hon. Gentleman wants to refer to the amount that we are going to spend in the regions, he must acknowledge the fact that we are increasing spending on English Estates as well. That increase is significant.
In 1987–88, we increased English Estates' planned programme in the assisted areas from £33.5 million to £37 million. As a result of higher asset sales, English Estates is likely to achieve a record programme this year of—[Interruption.] I am sorry if the hon. Member for Glasgow, Garscadden (Mr. Dewar) has not heard of English Estates, but this is relevant to the main argument.
English Estates is reaching a record level of spend this year of £47 million. In 1988–89 we shall ask it to plan for a programme that is £5 million higher than the £37 million planned in 1987–88. In practice, we expect it to exceed that figure and we shall authorise it to spend up to £49 million if it can generate the necessary funds from its own resources. Longer-term spending, about which some hon. Members have expressed concern, is well covered by our revised programmes. Expenditure on regional development grants will naturally decline, as the explanatory and financial memorandum to the Bill makes clear.

Mr. Blair: rose—

Mr. Clarke: I will not give way. I have given way repeatedly throughout my speech. The hon. Member for Sedgefield would be wiser to save his interventions on spending until I have given all the figures. He would be well advised to listen to those figures before he rises to criticise them. I have given the hon. Gentleman some figures. I have said that he must take account of increased spending on English Estates, increased spending on the Welsh Development Agency—

Mr. Campbell-Savours: On a point of order, Madam Deputy Speaker. Is it in order for a Minister, recognising that one crucial figure remains, to continue to avoid answering questions at the Dispatch Box in this way? Why will he not give way about this one figure?

Madam Deputy Speaker: It is perfectly in order for the Minister to express himself as he wishes.

Mr. Clarke: I have given way about 10 times. I have given the published White Paper figures showing the increase in our planned expenditure. I have just explained the other increases in expenditure which must be taken into account. No doubt there is one figure which the hon. Member for Workington (Mr. Campbell-Savours) clutches and which he believes will make his point and when he catches your eye, Madam Deputy Speaker, he will have his chance to give that figure.
As I have said, we cannot predict the extent to which our new schemes will be taken up. Take-up will obviously

vary from region to region, but we have provided and planned for growing expenditure. The main point is that I do not believe that policy should be judged solely by the quantity of expenditure. It should be judged by its value. However, on quantity I believe that we are on sound ground.

Mr. Barry Jones: rose—

Madam Deputy Speaker: Order. Only one hon. Member on his feet at a time in the House, please.

Mr. Clarke: Does the former Secretary of State for Scotland wish to have a word, as he rose first?

Mr. Bruce Milian: The Minister has given a certain omnibus figure. He said that regional selective assistance is being correspondingly increased to make up for the lack of regional development grant. Will he disentangle these figures and give us specific figures for the section 7 regional selective assistance in 1987–88 and in subsequent years, because the White Paper conspicuously fails to give these figures?

Mr. Clarke: I can give the United Kingdom figures for regional selective assistance for the years in question. In 1987–88, we are providing for an outturn of £215 million, compared with a White Paper figure last year of £222 million. As the right hon. Gentleman knows, the figure is demand-led. For 1988–89, last week's White Paper shows a figure of £266 million. The previous year's White Paper provided £245 million, so, again, there is an increase in planned provision. For 1989–90, the figure in this year's White Paper is £256 million. The figure in last year's 'White Paper was £217 million. For 1990–91, the figure is £284 million — a continuing increase, compared with an extrapolation from last year's White Paper of £222 million.

Mr. Leon Brittan: rose—

Mr. Clarke: I congratulate the right hon. Member for Glasgow, Govan (Mr. Milian) on having got on to the point that our planned provision for RSA is greater than last year's planned provision.

Several Hon. Members: rose—

Mr. Clarke: Hon. Members must allow me to make my point, as I have been led into it. The figure is higher than last year's planned provision and is a continuing higher provision year-on-year to take account of the increased demand.

Mr. Brittan: My right hon. and learned Friend gave the figures for selective regional assistance and said that they were for the United Kingdom. Will he confirm that that was an error and that they are figures for Great Britain?

Mr. Clarke: I will confirm that. I have no Northern Irish figures at all. The figures were for England, Wales and Scotland.

Mr. Blair: rose—

Mr. Clarke: The hon. Member for Sedgefield will have to make his own speech on the figures. I have given an exhaustive list of figures from this year's and last year's White Papers. The Opposition wish to scratch around for a basis on which they can oppose this sensible change in the nature, not the volume, of regional assistance. I shall listen to the hon. Gentleman's point when he is called.

Several Hon. Members: rose—

Mr. Clarke: I must get on. More time is now being taken up with attempts by the Opposition to find a figure on which they can base an argument than with anything else.
I accept that there is a change in the nature of regional policy. Ending regional development grant was intended as a significant change in regional policy. It ends a line of policy instruments that we can trace back to Hugh Dalton's regional policies and beyond. This Government have the courage to change the nature of regional policy because we are so much more successful than our predecessors in creating the climate for economic success. The objectives of regional policy — to reduce job disparities and to encourage modern, locally based growth — remain. In that sense, we are building on the framework set out in the Government's last major review of regional policy in 1983. That review had already signposted a move away from automatic grants towards greater selectivity and cost-effectiveness.
It is not surprising that, as some hon. Members have said, expenditure has settled down to a level much lower than it was 10 or 20 years ago because we have put these cost per job links into the grants that we now pay. However, it would be nonsense to carry on blindly with policies which cost a great deal of money when, in some parts of the country, they have manifestly not provided an effective solution to the regional problem. RDG simply no longer fits what the regions need to enhance their economic performance. They need better targeted help for those projects which make an effective and lasting contribution to local economies.
We believe that industry is behind us on these changes. The majority of industrialists in all regions who responded to a recent MORI survey agreed that the Department of Trade and Industry serves industry better when it seeks to maintain an economic climate than when it tries to give specific assistance. Firms have also expressed the strongest support for the Department's policies based on expertise rather than financial aid. The Scottish CBI has welcomed the initiative
as a bold shift to keep incentives in line with changing industrial structures".
It believes that it creates
a straight path for new jobs".
That is the essence of our enterprise and industrial package.

Mr. Barry Jones: rose—

Mr. Clarke: At the moment, the economy is buoyant. Overall investment is at record levels and the outlook for investment is good. We are maintaining public resources for the regions, but we must use those resources in better ways. We believe that our new schemes and policies will be more effective than regional development grant in strengthening regional economies, in Scotland and Wales as well as in England. That is why we believe that it is a sensible measure to end the automatic RDG scheme and I ask the House to support the Bill.

Mr. Tony Blair: I suppose that we should pay the Minister of Trade and Industry the compliment of thinking that he did not actually believe the speech that he has just made.
Today we are debating the abolition of regional development grants, which have accounted for almost

three quarters of regional aid since 1979. That has created or saved two thirds of the 600,000 or more jobs for which, over the years, regional policy has been responsible. That is the one part of Government finance for the regions which, by being automatic, is certain. That has been shown by every one of the many reports commissioned by the Government to be critical to investment in the regions.
When the Government protest that we should accept their promise of good faith in respect of the Bill and that it is all a part of the reorganisation of resources, not of the reduction of resources, we should tell them that we find their protestations hollow and incredible. For four years, since they found their regional aid budget difficult to cut, precisely because of regional development grant, they told us that with each change, all they were doing was obtaining better use of the same money. Every time they have made such a promise, they have broken it. Now they make it again and expect to be believed.
Whatever the Government say, we have no doubt that the issue today is not some academic or administrative argument about the different forms of regional assistance, not an assessment of how we achieve greater efficiency in the use of money, but whether the concealed agenda of this Bill is not rather a massive reduction of resources to the hard-pressed regions. Indeed, the only frank statement that has been made about regional development grant in recent days is the title given to the Bill—the Regional Development Grants (Termination) Bill. That is the Government's response to the divisions of this country.
It is not easy to piece together all the various figures that come from the White Paper on public expenditure, where England, Scotland and Wales are all differently treated, and where, if the purpose of the White Paper is not to obfuscate, certainly its effect is to make it extremely difficult to know where the various functions fit in and where the various figures given by the Minister in the statement relate. Some appear to relate to England and some relate to Great Britain as a whole.
However, we should begin, when we test the Government's good faith, to recognise that they do not come to this topic with an innocent past. They have a record, with respect, as guilty and as long as their term of office. Let us consider regional preferential assistance from 1979 onwards. In 1979, it stood at almost £1,200 million for Great Britain. By 1986–87, it was down to £726 million and in 1987–88 we expect a further cut of some £300 million. Therefore, whereas the north received over £300 million in 1979, last year it received £135 million. This year it will receive only about £80 million or £90 million. The position is almost exactly the same for the north-west.
Yorkshire and Humberside will see their budgets cut. In 1979, Scotland received £280 million. Last year the figure was down to £241 million. This year already, before the changes, it is down to £123 million. In 1979, the figure for Wales was £207 million. Last year, it was down to £144 million. It is now down to about £88 million. Indeed, since 1979, before the changes have taken effect, about £2·5 billion has been taken out in regional aid. In other words, it is now less than one third of what it was when the Government came to office.
That is the context in which we examine the Government's promise today that the changes in the Bill are designed simply to reorganise existing resources, that it is just an organisational change and that it is all about better value for money.

Mr. Tim Devlin: Would it not be right to say that, in 1979, when the Government came to power, about £1 million a day was being poured into British Steel, partly through regional development grants, and that, as British Steel is now a profitable company and does not need that subsidy, there is no need for the payment to continue?

Mr. Blair: The money that is going into the hon. Gentleman's region — quite apart from support to industry— by way of the grant, the abolition of which we shall determine today, has been slashed to a third of what it amounted to before. [Interruption.] With great respect, that is the figure. This year, in regional preferential assistance, Wales will receive less than half what it received under the same provisions in 1979.
When he announced these changes in the House, the right hon. and learned Gentleman said:
Let me make it clear that we are not proposing any reduction in the Government's total regional spending, but we believe that existing resources can be spent more effectively than hitherto." —[Official Report, 12 January 1988; Vol. 1433, c. 147.]
It is against that background that we examine the Government's claim. When he introduced the White Paper, the right hon. and learned Gentleman said that there would be no overall cut in regional spending in the Government's regional aid budget over the next few years. Interestingly, the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) put a specific question to him. He asked whether the Government realised that, above all, they would
have to satisfy the country that when all the proposals have been implemented the amount of money being spent on regional policy in real terms is at least as much as it is today?" —[Official Report, 12 January 1988; Vol. 1433, c. 151.]
The key to understanding what the Government have done is that they are not comparing like with like when they give their figures for the next few years. It is true that the White Paper figures on public spending show that the budget will remain constant and will then fall only a little, but that is precisely because the Government are not comparing like with like. Built into the White Paper public expenditure figures is a whole section that concerns regional development grants, although, of course, the purpose of the Bill is to abolish them. We are told in the preamble to the Bill that regional development grant, although it cannot be applied for after 31 March 1988, will still continue to be paid right up to 1990–91. Therefore, the true comparison is between the system that exists now and the system that will exist when regional development grant is no longer paid.

Mr. Kenneth Clarke: I assume that the hon. Gentleman will concede that, when he went into the history, he did not compare like with like in comparing RDG2 now with RDG1 back in 1979. A change in policy was made. It appears to have been wholly beneficial to regional economies and has done them no damage at all. In his last sentences, describing the next three years, does he deny that the total level of resources planned to go into the regions is greater than was planned in last year's White Paper? He cannot deny that, yet he is trying to find convoluted ways of taking it apart.

Mr. Blair: The right hon. and learned Gentleman's case is that the abolition of regional development grants will not affect the overall level of regional spending, and that

that is proved by the White Paper. But the White Paper includes a whole section of transitional money that will be paid in regional development grants.

Mr. Rhodri Morgan: That RDG money is gone, it is committed. New firms cannot apply for any of that.

Mr. Blair: Exactly.
The true comparison is not between the system as it is now and will be over the next few years, because we are still receiving regional development grants. The true comparison relates to when regional development grant ceases to be paid. The question is whether the right hon. and learned Gentleman's protestation that regional selective assistance will grow to meet the shortfall of regional development grant is correct. He is treating as permanent what is in fact the transitional working through the system of regional development grants being paid now.

Mr. Kenneth Clarke: That is exactly what the total figures that I kept reciting demonstrated. That is the hon. Gentleman's point. I trust that he is not seeking to claim that, in talking about the total regional spend, which he makes the main point of his argument, we should ignore continued expenditure on commitments and RDG.[Interruption.] Yes, of course it is. It is being spent on industry under regional development grant.
If the hon. Gentleman is saying that, over the three White Paper years, we should ignore for Great Britain figures of £279 million, £209 million and £125 million, of course he will show a cut. It is rather daft arithmetic to ignore a total of about £700 million that will be spent in the regions during the year.

Mr. Blair: With great respect, the right hon. and learned Gentleman has forgotten that the purpose of the Bill is to abolish regional development grant. Therefore, it is ludicrous to compare the system as it obtains at the moment, under which regional development grant is still being paid, with the system that will obtain when the money has worked its way through the system and is no longer available. In other words, the true comparison is between the time when regional development grant is no longer paid and the system that exists at present.

Mr. Kenneth Clarke: rose—

Mr. Blair: The right hon. and learned Gentleman would not give way to me, but I shall be extremely generous and give way to him. Perhaps he will answer my question. Does he say that, when regional development grant ceases to be paid — in other words, when the transitional provisions come to an end — the same amount of money that currently finds its way into the Budget in regional development grant will be spent in regional selective assistance?

Mr. Clarke: Do I gather that the hon. Gentleman's case that, somehow, we are cutting planned regional provision involves my making a guess at this stage about what spending should he in 1992–94? That appears to be the burden of his case. I have never known any Minister in any Government to make such a guess. We have a three-year White Paper that shows that the hon. Gentleman's case is wrong.

Mr. Blair: With great respect, it is becoming clear that the Minister himself does not believe that, when he abolishes regional development grant, regional selective


assistance will fill the gap. When he announced his White Paper, he told us that funding was remaining level. Now he is saying that it will stay level for three years, will drop and then will be cut. That is the truth.
There are only two sources of money that allow the right hon. and learned Gentleman to say that money which will no longer go to industry through regional development grant will be provided in the regional aid budget. The sources are regional selective assistance or the new initiatives.

Mr. Richard Holt: In all the bantering so far, no one has mentioned the many millions of pounds that go to Teesside and Tyneside and the urban development corporations. It is regional aid from another Department, but it is far more money for the north of England.

Mr. Blair: It has been put to the hon. Gentleman on many occasions that the money going to urban development corporations barely matches a fraction of what is being taken out in rate support grant and other matters.
Let me deal with the new initiatives that the Government have launched. I refer to consultancy services. Remember that the Government say that the business development initiative, of which the consultancy service is a part, will mean that new resources go to the regions. They say that £250 million will be spent over the next three years in the business development initiative. I assume that I am right in thinking that the business development initiative comes straight out of the Department of Trade and Industry and is a nationwide scheme covering the whole country; in other words, that that funding includes the funding—this is important—for Scotland and Wales too. We know already that some £25 million a year is already being spent on consultancy services, so we can knock off £75 million over three years straight away.

Mr. Kenneth Clarke: Can the hon. Gentleman say why?

Mr. Blair: Because the Minister is saying that this is money over and above what has already been spent, so it is right to subtract what is being spent at present.
The first and critical thing to remember about the consultancy services is that they are to be available over the whole country. In other words, there is no guarantee at all that any proportion of this money will find its way into the development areas or the assisted areas. There is a higher level of grant, but it is fairly marginal.
My hon. Friend the Member for Sheffield, Central (Mr. Caborn) managed to be put on the mailing list of a particular director from the south-east regional office of the Department of Trade and Industry. I want to put this point to the Minister specifically, and I will give way to him if he is prepared to deny it. This is what the director of the south-east regional office said about the consultancy services — the main part of the Government's business development initiative:
An important part"—
this is, of the enhanced role of the DTI—
will be a single advisory service delivered regionally, and we in the south east regional office are to be responsible for some 40 per cent. of this consultancy scheme.
In other words, 40 per cent. of the business development initiative is to go to the south east alone, not even counting

East Anglia and the south west. How much will actually go to the north, to Scotland, to Wales and to the midlands? The truth of the matter is that it is unlikely that anything other than a small fraction of this money will find its way into the depressed regions of the country.
As to the other grants that the Government are giving, it is all very well to say that in the development areas these small firms will have a regional investment grant available to them—they have it available to them at the moment, under the automatic development grant. The greatest amount of money, even on the Government's own figures, in three years' time that will be spent on this is about £50 million.
If we take the amount of money through the business development initiative—

Mr. Kenneth Clarke: Where does the hon. Member get his figures from?

Mr. Blair: Those are the figures in the White Paper, with respect. It is £14 million next year, rising to £55 million in 1990–91. That is in regional investment grant and innovation grant—

Mr. Clarke: That is not what we are talking about. We are talking about £250 million which, if 40 per cent. goes to the south-east — if the regional director has his ambitions to realise—still leaves a substantial amount of money going to the rest. The DTI south-eastern region does not cover just a little corner south of London; it is a huge tract of the country, including all of London and substantial areas to the north and south of it.

Mr. Blair: If 40 per cent. goes to the south-east, that is wholly disproportionate. The Minister's case is that this money is in some way in substitution for regional development grant, but the truth is that the bulk of it will go nowhere near where regional development grant goes now.
What I had moved on to was regional investment grant and innovation grant. I want to point out to the Minister that, even at its highest, in three years' time, it amounts to just over £50 million. The figures that he has given today for regional selective assistance indicate that some £215 million is going now in regional selective assistance, rising to £284 million in 1990–91. That is a real rise of about £50 million or £60 million.
There is no conceivable way that the money available under the business development initiative, under the small firms grant or under the extended regional selective assistance, even on the Government's own figures, will anywhere near compensate for the abolition of regional development grant. In fact, there is a substantial cut, which will be running after the transitional period of regional development grant, of about £150 million to £200 million each year.
In justifying this, the Government have attempted rather half-heartedly to disparage regional development grants, to claim that they are paying out when it is not really necessary—even Sullom Voe was wheeled out last time before our eyes.

Mr. Kenneth Clarke: It is a good example.

Mr. Blair: It may be a good example of what was happening four years ago, but the Government changed the regional development grant system in 1984 and said that they had cured all that. When they changed the scheme in 1984, they told us at the very same time that it


was the final change that would need to be made and that the automatic system of regional development grant was a help to the regions. It would have been difficult for them to say otherwise, because the DTI has commissioned no fewer than three major reports on regional development grant and regional incentives.
The first report was called "The effects of Government's regional economic policy", which had this to say:
The conclusion that regional policy generated some 450,000 manufacturing jobs in the Development Areas which were still in existence in 1981 leaves out of account any secondary or multiplier effects … this project has not been directly concerned with these multiplier effects but, using a conventional medium term regional multiplier of 1·4, the 450,000 manufacturing jobs would generate a further 180,000 jobs in service industries, making a grand total of surviving regional policy jobs of 630,000 at 1981. This is a real and substantial achievement.
Two thirds of those jobs came in with the regional development grant.

Mr. Philip Oppenheim: The gist of the hon. Gentleman's argument seems to be that the fact that we might supposedly cut the total amount going to the regions is necessarily a bad thing. Does he not accept that it is not just how much one spends but also the cause on which one spends? Does he not also accept that there are some best estimates that the cost per job created by regional aid in the 1960s and 1970s was £50,000 in today's money? Does he not also accept that, however well intentioned, much of the regional aid led to totally unsustainable factories—for example, Speke, Bathgate and Linwood—which were well intentioned but which could not be sustained and did tremendous damage to the car industry in the midlands?

Mr. Blair: It is correct that one must take a general view when assessing the overall impact of regional development grant. The overwhelming conclusion of the Government's own report, however, is that, whatever the individual cases where grant could be said to have been misused — for example, Sullom Voe—overall and in general terms, which is the sensible way to look at it, the writers of the report found a real and substantial achievement. The criticisms that were most frequently made of the regional development grant system could he most easily applied to the regional development grant system prior to 1984— but what we are talking about now is abolishing even the scheme as it exists at present.
The second report commissioned by the DTI, "Regional incentives and the investment decision of the firm", was by a group of Scottish economists and is even more surprising in what it says about regional development grant:
One of the most frequent criticisms of RDG is that, because of its automatic nature, it is awarded in many cases where it is quite unnecessary and can have no influence on the company's investment decision. The evidence of our study suggests that only a minority of companies in general, and a tiny minority of small companies, rate RDG as having no influence on the decision to invest in the project under consideration and over half of the companies rated RDG as important or crucial to the decision…In short, our evidence shows that a mixture of automatic and selective assistance, taken together, provides a powerful package.".
That also was a Government report.

Mr. Tim Smith: Is it not the case that most of these projects needed the investment to go ahead,

as that report apparently claims, so that those projects would in future be able to qualify for regional selective assistance as the Government propose?

Mr. Blair: I do not think so. Regional selective assistance does not operate under the same criteria as regional development grant. In addition — this was found in the report to which I shall turn in a minute—the automatic nature of the regional development grant had a crucial effect on a company's decision to invest. The report that showed that was again commissioned by the DTI; I am dealing only with reports that it has commissioned.
The report on industry's early reaction to the new regional development grant was carried out by PIEDA, the planning and economic consultants. It said:
The new RDG is an important factor in the investment decision-making process. One-third of those interviewed identified RDG as a critical factor in their project appraisal and investment decision. For many more the grant was an important, but not critical factor. Less than one-quarter of the companies surveyed said that the RDG had no influence on their investment decisions.
Even the White Paper said that the cost per job of RDG under the second scheme was more cost-effective than regional selective assistance. We know that RDG has created jobs; we know that it is cost-effective; we know that it is a vital component in investment decisions; and we know that it is at its most effective when there is a mix of RDG and selective assistance. Therefore, I ask the Government, on what evidence do they base their assertion that it has no further use?

Mr. Kenneth Clarke: The hon. Gentleman ducked the point that my hon. Friend the Member for Beaconsfield (Mr. Smith) made, then gave my hon. Friend the case that he was making. The figures quoted by the hon. Gentleman show that one quarter of RDG recipients said that it made no difference to their decision. Only one third said that it made a critical difference to their decision. My hon. Friend was correct to say that that one third will now presumably apply for regional selective assistance. The one third that weighed the critical difference will still be eligible for grant. The hon. Gentleman is happy to contemplate one quarter or more of the expenditure being wasted and having no impact on investment decisions to maintain public expenditure at levels that he would like.

Mr. Blair: It is nonsense, even for the 25 per cent. of firms that would have taken investment decisions anyway, to argue that that investment has no beneficial effect on the regions. The Minister is saying that those firms that would have applied for regional development grant will now receive regional selective assistance, but the other conclusion that the report came to is that many firms applied for both. But there were many circumstances in which they would have been eligible for automatic regional development grant but not eligible for regional selective assistance.
If it were the case that all those firms that were in receipt of regional development grant will now receive regional selective assistance, one would expect a huge burgeoning increase in regional selective assistance expenditure. The figures that the Minister gave do not show that.
I do not know whether the Minister is aware of the numbers of applications this year for regional development grant and regional selective assistance, but in 1987–88, in England, there were 1,600 applications for


regional selective assistance and over 6,000 for RDG2 alone. In Scotland, there were 190 applications for selective assistance and 3,050 for regional development grant. In Wales, there were 152 applications for selective assistance and 1,508 for regional development grant. The likelihood of those applications being fed through regional selective assistance is extremely unlikely, and nothing in any of the Government reports suggests that it is likely.
I return to the point that the Minister made earlier—that the automatic nature of regional development grant is no longer necessary. It is extraordinary that every report the Government have commissioned has been unable to justify the abolition of grants because they are no longer needed. There is nothing in any of the White Papers, the glossy brochures or the logos and slogans that decorate the walls of the DTI to re-educate civil servants in the ways of the master, that provides sufficient help to the regions to make up for the abolition of regional grant.
One of the more curious elements of the noble Lord, Lord Young's programme is that he has no doubts as to the massive importance and portentous nature of it. In the Financial Times of 16 January he gave an interview, which says:
Last October, Lord Young set out a series of policy objectives for the DTI, which he compared bizarrely to Mein Kampf.—'No one can say that they did not know what was coming."'
A more eccentric example of how the noble Lord sees his programme would be hard to find.
Overall, the White Paper, apart from the cut in regional development grant, does not merit any comparison that would exaggerate its significance. The truth is that there is more of the salesman's patter than any substance in the White Paper. It is the language not of industrialists but of advertising executives.
I asked for a copy of "The New Regional Initiative", the guide to regional selective assistance. As you will see, Madam Deputy Speaker, it is a very glossy brochure. I asked for the previous regional selective brochure and I tried to discover, apart from obvious differences and various minor changes that have been made, what the difference was between the two. If hon. Members look at them they will see that the difference between the two is in the covers.
The notion that in this White Paper we have engaged in an awakening of the spirit of enterprise in Britain is fatuous—a piece of classic hype. In his White Papers, Lord Young is becoming increasingly like Jeffrey Archer in his novels—the promotion is infinitely better than the writing.
I should deal with a further point that the Minister made. It was presaged by a rare trip that the Prime Minister made to the northern region. This is the idea that we no longer need the regional development grant, because we are doing so well. In The Independent of 5 January 1988, the Prime Minister was quoted as saying:
I notice that people who go to look at the north and north-east go up thinking there are dark satanic mills and it is all grey and unwelcome. They come back saying, 'Do you know what it is really like? The countryside is fabulous, the people are marvellous, there are thriving industries and shopping centres."'
We might have known that when the Prime Minister praised us on 5 January she intended to bury us on 12 January.
The idea that we are victims of our own success is so absurd that it beggars belief. Only this Government would have the priceless audacity to present a cut in regional assistance as a compliment to our self-reliance.
The north-south gap, as every objective indicator shows, is not narrowing but widening. In November, the Low Pay Unit showed that incomes in the south were, on average, 50 per cent. higher. With regard to low pay, almost one third of those in the north were on wages below the decency threshold of the Council of Europe. In December, the Central Statistical Office's regional accounts showed that the south-east was 13 per cent. better off than elsewhere and that only two areas—the southeast and East Anglia—enjoyed above-average wealth.
On 6 January, a survey quoted in the Financial Times said:
A disparity between the north and south of Britain is confirmed in a survey to be presented at a conference today. The top 35 areas in a league combining 10 economic indicators all lie south-east of a line from the Severn Estuary to Lincolnshire. Towns in north England, Wales and Scotland are concentrated towards the bottom.
Social Trends, published more recently still, shows that the north has the highest proportion of children receiving free school meals and the highest proportion of income derived from social security, followed by Wales, the north-west, Scotland, the west midlands, Yorkshire and Humberside. The mortality rate of the north is 20 to 25 per cent. above average. It has the largest percentage of permanently sick, the largest percentage of infant mortality and the largest population loss. It is ludicrous to say that the problems of the north have disappeared and that we do not need the regional assistance that we were receiving before.
The right hon. and learned Gentleman said that, because unemployment is falling, we no longer need an automatic regional development grant, but unemployment is still double what it was in 1979, when four times the amount of money was coming in in regional aid. As for investment, it is still 20 or 30 per cent. below what it was. Therefore, it is again absurd to suggest that regional aid should be cut because we are doing so well.
The truth is that, after four decades of cross-party agreement as to the essential importance of regional policy, we have today to make the case for it anew. This debate is not about value for money or efficiency. It is the culmination of a Government process of disinvestment in our regions. We need regional policy, not just socially but economically, because our regions are our manufacturing base, and in our manufacturing base lies our capacity to create wealth. It is no coincidence that, as manufacturing output and investment declined, so did our regions.
We know, too, that regional policy is necessary just to restore some of the equity in the use of natural resources. It is a common misconception that the south subsidises the north. For example, if we look at where defence contracts go or at the proportion of aid for research and development for fibre optics, or for any of the other Department of Trade and Industry programmes, we see that a disproportionate amount goes to the south. If we look at where the tax perks in the business expansion scheme, or any of the other myriad schemes available under fiscal policy, go, we see that they go to the south. In a real sense, on any rational basis, regional policy is necessary to redress the balance of Government economic policy.
But at the heart of this issue lies a recognition of the importance of maintaining the integrity of this country. It


is absurd that, on the one hand, we have falling house prices, migration, acres of empty factory space, land that could be built upon should anyone want to do so, people still fighting for jobs, even on low pay and prospects, in the north; while on the other hand, we have house prices increasing by 30 per cent. or more in a year, congestion, pressure on the environment, skill shortages and rocketing factory rents in the south. A narrowing of the gap between the north and the south is in the interests not only of the north but of the south. It is part of the interests of the whole country. That is why we have to make this case again.
For four decades there was a consensus, not as to the means—it is not a case of being wedded to the old-fashioned traditional ways of doing it and we are perfectly able to take on board and realise the need to change the means of industrial assistance—but as to the end, which was always sacrosanct. That was the notion that it was a critical responsibility of Government to ensure the cohesion of the country or, in other words, the belief that it was a necessary part of our democracy that our living standards and our life experiences were the same. It is to the shame of the modern Conservative party that that consensus has now been broken. It is the Labour party that will rebuild it.

Mr. Leon Brittan: In the concluding part of his speech, the hon. Member for Sedgefield (Mr. Blair) stressed the importance of regional policy. I entirely agree with him and have consistently argued the case for such a policy. Where I disagree with him is in his suggestion, express or implied, that the Government do not support an effective and vigorous regional policy. He may disagree with my right hon. and learned Friend the Chancellor of the Duchy of Lancaster, but, as one who has worked with and known him for a generation, I know that my right hon. and learned Friend's interest in, and support for, regional policy is not skin-deep or short-lived. He would not be party to a policy which he thought repudiated the regional policy that the hon. Member for Sedgefield is right to say is crucial for this country.
Nor do I believe that the hon. Member for Sedgefield does justice to his case by talking simply about disparities between the different regions. Those disparities exist, but the suggestion that the Government have, in some blithe or heedless way, ignored that or do not care about it is quite wrong. The hon. Gentleman must ask himself not just whether there are disparities, but what will most help to end those disparities or at least reduce them substantially. He has to ask himself what is happening in the regions, what is the trend, and what is going on.
The hon. Gentleman's constituency is in Durham, which is very near the county of Cleveland. He will know that the Evening Gazette, a newspaper published in Middlesbrough, has not been slow during the years of recession to criticise this Government and point out the ills —industrial, social and moral—of unemployment in Cleveland, which was the highest for any English county. Last week, the Evening Gazette published a special business supplement, which was headed:
We are on our way. Cleveland goes from strength to strength.
If that is thought to be just advertising hype, one can read an article by Mr. Michael Morrissey, and those who

know him appreciate that he is not always the most cheerful of people as far as business prospects are concerned. It says:
We are riding on a tide of optimism. The sweet smell of success is in the air.
On the other side, it says:
The infectious joy of big ideas. Something seems to be happening.

Mr. Morgan: rose—

Mr. Brittan: No, I will not give way, because I would like to develop my speech.
The hon. Member for Sedgefield might know that the principal cause for that is the development corporation on Teesside. Although he can quote figures showing that comparatively small sums of money are being spent, he will also note that the whole point of the development corporation is the gearing effect and the private money that it brings in on a massive scale. If he were to read the Evening Gazette, which, although published in Cleveland, almost certainly circulates in his part of Durham, he would know full well that hardly a day passes without report of some further project that has been engendered by the development corporation.
The Government's policy, as announced in the Bill, has to be seen in the context of the White Paper, "DTI—the Department for Enterprise" which the Government put forward as a whole and which will be particularly beneficial to the region. The idea of bringing education and industry closer together with work experience for both teachers and pupils is valuable. The extra Department of Trade and Industry support for computer-aided design is also valuable, and those who have seen the design department at Teesside polytechnic will appreciate just how valuable that can be.
The concept of business development initiatives with the use of outside consultants for design, marketing, quality management and manufacturing systems is all to the good. I am glad that the quality initiative is to be broadened to advise businesses of what is known as the total quality approach, which has been so successfully adopted by leading companies, and in particular by ICI.
It is against that pattern, which shows the Government's commitment to effective regional policy, that one has to look at the proposal for regional assistance. I readily accept that the existing pattern is not sacrosanct. Changes are certainly worth considering. When 1 went to the Department of Trade and Industry in 1985, I was suspicious of the changes that had been made in 1984 and wondered whether they were consistent with an effective regional policy. However, I was persuaded that those changes resulted not only in a saving of money but in regional assistance being much more closely related to jobs and were therefore fully justified.
However, I cannot say that I am persuaded of the benefit of the proposal to drop the regional development grant. I think that the comparative advantages of certainty and automaticity are real. There always has to be a balance. My right hon. and learned Friend the Chancellor of the Duchy of Lancaster is, of course, right to say that regional selective assistance is not new and that there are other discretionary schemes. Discretionary schemes can and do exist, but the criticism that I make of the proposals in the present legislation is not that they retain a selective element, but that they move over to a totally selective concept, and that is a very different matter.
There are real advantages in grants available as of right. Imagine a company that has to consider whether or not to proceed with a project, particularly in an assisted area. If that company is faced with a proposal from the director who is arguing for the development, the costs will be sought and the finance director in particular will cast a beady eye on them. He will know from the plan put forward by the director advocating the scheme that the costs will definitely be reduced to reflect the 15 per cent. regional development grant. It will be a certainty, and the decision whether to spend scarce resources in that direction or in some other will be made on that footing.
How different it will be when a director, putting forward a project for a development in an assisted area, comes to the board and says, "This is what it will cost and this is what we hope to get out of it, but, in reflecting on whether it is a good or bad prospect, I cannot subtract 15 per cent. for regional assistance. I can only tell you that if we go to the DTI, we may be also to persuade it, after some months, to give us regional selective assistance. Such assistance is discretionary and I cannot tell the board where we shall get it. We have to surmount certain hurdles and show that the project is viable. It is not enough that the board may think that it is viable; we have to satisfy the DTI. Furthermore, to get the money, I have to convince the DTI that we would not otherwise undertake the project — here or anywhere else. God alone knows what questions I shall have to answer to satisfy officials at the DTI that we would not otherwise carry out the project. If the hoard asks whether we shall get selective regional assistance, I can only say that I hope so." It would not take a beady-eyed financial director to say, "Exclude that from our considerations." The effect is sure to be that a project that would have gone ahead on the basis of regional development grant will not go ahead if it is submitted to the uncertainties and delays inherent in the regional selective assistance process. That is the reality, and the Minister is unwise to ignore it.
In answer to such arguments, my right hon. and learned Friend says that much money is wasted because, under the present system, developments go ahead that would go ahead in any event and that they are getting public money unnecessarily. As Chief Secretary to the Treasury, I was never accused of being anxious to spend public money unnecessarily. However, the argument does not really stand up, because large sums of public money are spent in the certain knowledge that a proportion will go to encourage people to do something that they would do in any event.
Let us consider the question of tax reductions. I look forward to the time when, as a result of prudent management of the economy, my right hon. Friend the Chancellor of the Exchequer can announce tax reductions in the Budget. Opposition Members will argue against that, but the case that Conservative Members will mount in favour of tax reductions is that they act as an incentive and that, if they have less tax to pay, people will do things that they would not otherwise have done. Although that is profoundly true and more than an adequate justification for tax reductions, one cannot say that everyone will do something that they would not otherwise have done, because of the tax reductions; some people would do those things in any event.
If that argument is too broad and general to persuade the House, I give as an example the business expansion scheme, which involves not public expenditure but a specific tax concession geared to investment. Are we asked to argue against that because we cannot prove that the investment would not otherwise have taken place? No one has suggested that or argued that there should be a change in the business expansion scheme. We need an element of automaticity to achieve the full incentive effect. Although I would not cast aspersions on the intentions or motives of my right hon. and learned Friend, I am bound to question the wisdom of completely removing regional development grant and relying on selective and discretionary assistance.
I have confidence in the Government's regional development policy, because I know my right hon. and learned Friend and I know that his intentions are sincere. However, it is important that this new policy should carry conviction in the regions among those who do not automatically take what Ministers say on trust and in places where it is the business of the hon. Member for Sedgefield to go around explaining why it should not be taken on trust.
When it comes to persuading those in the regions, money counts. My right hon. and learned Friend did the Government's cause no great service by not answering the specific question about cash that I put to him when we debated the statement. The Government generally are not assisted by the obfuscation in the public expenditure White Paper, which puts regional and general assistance together in a single line. The Government are not assisted by taking three years together and presenting that total. Those are tricks that I learned at the Treasury, and I am glad to see that the right hand has not lost its cunning. They will do for a day, but they will hardly do for a week. They will certainly not do for a month, and beyond that they carry no conviction at all.
The reality is simple. My right hon. and learned Friend is right in saying that the figures that he has announced amount to an increase over and above the plans. However, the plans did not fully take account of the expansion in regional development grants as a result of the effectiveness of the efforts of the Department's regional offices in drumming up business instead of waiting for people to apply for grants —a policy that I applaud. One needs to consider not only whether the Government are spending more money year by year than they thought last year that they would be spending, because the expenditures are demand-related, not cash-limited. The real question concerns the expenditure at the end of the transitional period.
We need to consider what the expenditure will be when we have moved over from the present to the new system. There is no mystery about that. For Great Britain—this is why I checked my right hon. Friend when he inadvertently referred to the United Kingdom — it is expected that the outturn for regional expenditure—in regional development grants, selective regional assistance and the new investment and innovation grants—will be £478 million in 1987–88. The figure for 1988–89 is expected to be £560 million; for 1989–90, £513 million; and for 1990–91, £470 million. A comparison of this year with the last year for which figures are published shows a move from £478 million to £470 million. That is above the


planned figure, but if regional development grants had continued, the planned figure would have risen substantially.
The gap between expenditure today and the expenditure expected in 1990–91 is not large. If my right hon. and learned Friend wants people in the regions to believe that the changes are genuinely designed to replace one kind of help with another and not to save money, in his discussions with the Treasury later this year he must say that if the new policy is to achieve credibility in the region, a change is needed in the figures for those last years so that they at least correspond with the sum that is now being spent on regional assistance in real terms. I am sure that my right hon. and learned Friend will pay that visit to the Treasury, and I wish him luck.

Mr. Bruce Millan: I am not as confident about the last point made by the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) as he obviously was. However, I agree with the bulk of his speech, and especially with what he said about the importance of having an automatic system of grants, whatever the accompanying system of selective assistance. I am also at one with him about the public expenditure White Paper, because the passages dealing with the Department of Trade and Industry are a disgrace. They deliberately obscure the reality of the situation.
First, I should like to set regional policy in a wider context in relation to one issue of considerable importance to Scotland at present. I shall come to regional development grants in a minute or two. The Minister said that that was still part of general policy and that the Government were still generally committed to the regions. One matter that has always been considered of tremendous importance to Scotland — I dare say that the same is true in Wales and in the regions of England — is the need to have real centres of decision-making in the industrial sphere in Scotland, Wales and the regions.
In that context, I want to say something about Britoil, which is an independent oil company. It is the biggest independent oil company operating in the North sea—or, indeed, elsewhere. Previously it was the British National Oil Corporation, but it is now Britoil. Britoil moved to Glasgow and located its head office there. It did so as a deliberate decision of the Labour Government. I should say that those who were involved in the industry did not want to go to Scotland and, more especially, to Glasgow. However, Ministers insisted that they move to Glasgow, and the company has been a great success there. The oil company has a fine and splendid new building as its head office in Glasgow, and that has also been a tremendous success.
Britoil is now so valued and valuable that BP is desperate to take it over. However, if BP does take over Britoil, those important corporate headquarters will no longer be in Scotland. At best, Britoil will simply be a division of BP, and there will be only divisional headquarters in Glasgow instead of an important centre of decision making, employing many highly qualified people, as at present.
The Government can prevent that result through the golden share. Indeed, when the golden share was originally introduced, the Secretary of State for Energy, now the Chancellor of the Exchequer, gave specific pledges that the golden share would be used to prevent an unwelcome

acquisition of Britoil. This would be an unwelcome acquisition of Britoil. It would be unwelcome to the staff who work there and to the senior management. I am glad that the senior management have consistently and determinedly expressed their opposition to the takeover. I congratulate Mr. Walker and his colleagues on having done so in circumstances in which, in many cases, senior management would unfortunately have caved in.
The Chancellor's statement on 11 January 1988, in which he said that the Government would use the golden share, was hedged with all sorts of qualifications. He said that they would use it "in present circumstances" and
so long as it is in the national interest to do so." —[Official Report, 11 January 1988; Vol. 125, c. 13.]
If that was intended to scare off BP, it obviously has not done so. Although there may have been other possible bidders for the company, at the moment the chances are— I hope that it does not happen — that unless the Government take steps now to make it absolutely clear that they will use the golden share to the fullest extent and not allow anybody, specifically BP, to control the company in real terms, BP will not only have control of the company in terms of shareholding but, ultimately, in terms of full decision making. I refer not only to normal commercial decisions but to decisions about corporate headquarters and so on. It would be an absolute scandal if that was allowed.

Mr. Deputy Speaker (Sir Paul Dean): Order. I am finding it a little difficult to relate what the right hon. Gentleman is now saying to the Bill. I am sure that he can relate it to the Bill.

Mr. Milian: I made the point at the beginning that I was dealing with regional policy generally and it s an important part of regional policy that we should have such important headquarters in the regions, rather than in London, which is what will happen if Britoil is taken over by BP.
There are other aspects to be considered, such as monopoly in the North sea and the Kuwaiti shareholding in BP, but I am speaking specifically of the Scottish interest and of the interest of the staff who are extremely worried about the present position. The Chancellor of the Exchequer is deliberately allowing the position to drift, and, far from discouraging BP, he is encouraging that company not only to go ahead with its bid for Britoil but to believe that, once it has control of the shareholding, the golden share will not be used in any effective way and it will ultimately obtain full control of all the company's operations, including the board of directors. If he does not intend that, he should make that absolutely clear now. I advise the Minister who is to reply to the debate that at present there is no more important question of regional policy in Scotland than the threatened takeover of Britoil. The Government can stop that happening in the way in which it appears to be happening at present.
Turning to the Bill, there is no need for Opposition Members to argue the importance of regional development grants because the last annual report issued by the Department of Trade and Industry under the Industrial Development Act 1982, dealing with regional policy, mentions the results of a survey which was commissioned by the Department in February 1987. It states:
the Scheme is an important factor in companies' investment decisions.


The "scheme" refers to the RDG scheme. The annual report continued:
The take-up of the new Scheme by firms with 200 employees or less has been particularly encouraging".
We understood that the Government were especially interested in helping small firms. The annual report states that the take-up by small firms in 1986–87 amounted to
about 80 per cent. of the total grant.
However, under the Bill the Government are abolishing regional development grants completely. That does not make sense, if there is any real commitment to the regions or, for that matter, to small firms in this country.
As my hon. Friend the Member for Sedgefield (Mr. Blair) said in his extremely effective speech, there are always transitional arrangements when such changes are made. It is only when one considers later what has happened that one can understand the full impact of the changes. That is true of the 1984 changes in regional development grant. They did not look too bad to industry to start with. The Government gave all sorts of assurances about them not being particularly bad news for the regions.
However, looking at what happened, and remembering, incidentally, that the 1984 figures were considerably smaller than the figures that the Government inherited in 1979 because of earlier reductions in regional assistance, we find, in a written answer on 12 May 1987 to my hon. Friend the Member for Dunfermline, East (Mr. Brown), the overall figure for RDG for 1986–87 was £512 million and the figure for 1987–88 was expected to be only £211 million — a reduction of £311 million in one year, because that was the year for which almost the full impact of the 1984 changes began to be effective. Transitional arrangements had applied in earlier years.
The figure for Scotland for 1986–87 was £170 million and for 1987–88 it was expected to be £69 million. Therefore, in Scotland alone there was a reduction of £100 million in a single year. Again, that arose because of the 1984 changes. Therefore, when the Minister says, "Do not worry, because the figures in the future will not be worse than the figures now," we must set that against the background that the figures have now been savagely reduced because of the changes made in 1984.
Of course, it is very difficult — even if the Government were being honest about the figures they present in the White Paper on public expenditure—to disentangle all the various figures and the effect of the changes with RDG1, the system before 29 November 1984, and RDG2, the system from 29 November 1984, and the rest, changes made in 1984, which were modified with regard to small firms with fewer than 200 employees.
As my hon. Friend the Member for Sedgefield pointed out, it will happen again. The transitional arrangements will take us to 1990, or whatever, and it is only then that we shall have the full effect of the changes being made in the Bill.
I therefore turn to the Minister's idea, suggestion, or assertion, that we need not worry about that, because the figures may have been reduced — they are already savagely reduced—but at least they will not be reduced any further and the Government have planned expenditure in the regions which will show an increase.
First, I am extremely suspicious of Ministers when they say that it is not a real increase; the figures are different

from what they were in the previous year's White Paper. That does not mean a great deal. It is the reality of the expenditure, of the outturn in the current year and what will happen in the future, that we really have to look at.
The Government are really making the claim about the figures coming down no further on two bases. The first is the new business initiative, or whatever the scheme is now being called—in particular, for firms in the regions with fewer than 25 employees. A new incentive is being introduced for them. That is actually less of an incentive than the existing RDG2, gives for firms with up to 200 employees. The incentive for firms with up to 25 employees, even if it works for them, as I hope it will, will do nothing for them that they could not obtain under the present system. For firms with from 25 to 200 employees it disappears completely, because they are not covered by this scheme at all.
Then there is the whole question of what will happen to regional selective assistance. That, of course, was not dealt with at all. I was going to say that it was treated with obscurity in the public expenditure White Paper, but no figures are given for section 7 in recent years. We have the projected figures only because I asked the Minister during his speech to give them to us.
Let us take those figures at their face value, taking 1988–89. As I understood the right hon. and learned Gentleman — we shall check the details in Hansard tomorrow—section 7 regional selective assistance was estimated in the White Paper published a year ago to be £245 million for 1988–89. That was before any changes were made. In 1988–89, after these massive changes, it is going up to £266 million, a net increase of £21 million in one year, which is supposed to compensate for these vast reductions in regional development grants. It does not make sense.
There are other figures for some of these schemes, for business advisory services and the rest. In my opinion—we shall wait and see what happens—these figures are grossly overestimated. I do not believe for one moment that the kind of figures that the Government have put in the White Paper for some of the schemes will ever be spent. I am not sure that it would be a good idea if they were, because there is a limit to the amount of money one should be spending on consultancy services. Members of the accountancy profession will be delighted at this increasing emphasis on consultancy. It is a very profitable part of their work.

Miss Majorie Mowlam: Does not my right hon. Friend agree that it would be useful to ask the Minister to clarify whether those consultants will be employed in London or whether, in line with policy, they will be based in the regions and will be paid, in relation to delivering jobs, with a deal whereby money will be paid for the number of jobs created?

Mr. Milian: I do not want to say too much about consultancy reports. They vary in quality from the good to what in some cases cannot even be called indifferent, depending on the consultants and on the questions asked. What I am saying is that the figures in the White Paper seem to me to be unlikely to be achieved in reality. Even if they are achieved, those figures together cannot possibly make up for the reductions in regional development grants in places such as Scotland. Selective assistance in Scotland is running at about £40 million a year. In 1986–87 it was


£36 million. In Scotland, regional development grants were worth £170 million in 1986–87, compared with £36 million for selective assistance. Even with the reduction to £69 million in 1987–88, it is still a more important part of regional assistance than anything that can be done under selective assistance.
There is another consideration with regard to selective assistance. My hon. Friend the Member for Sedgefield gave some figures for the numbers of applications. I do not believe for one minute that the Department of Trade and Industry, the Scottish Office or whoever will handle these matters can deal with anything like that number of claims for selective assistance. Again, I refer to the Scottish figures that my hon. Friend gave: 190 claims for selective assistance; over 3,000 for regional development grants. Is it seriously suggested that the same civil servants can handle over 3,000 claims for selective assistance in Scotland and give them the care and attention, with references to the Industrial Advisory Board and all the rest, at present given to selective assistance? It is absolutely ludicrous. Either some of the claims will go through the early stages just to make the figures look better, or, more likely, many firms at present applying for automatic assistance will, as the right hon. and learned Member for Richmond, Yorks made clear, not apply for the new forms of assistance, or will not take the investment decisions that would have enabled them to apply for regional development grants.
The Bill is extremely bad news for Scotland, Wales and all the regions in England. I find it depressing that the Minister can say that the CBI in Scotland is largely in favour of what is happening there. That is a less robust attitude even than it took with regard to the 1984 changes. At least it was unhappy about them. If it is happy about these changes, all I can say is that it is a very poor indication of its real concern for industry in Scotland, and it is serving Scottish industry very badly, as the Government are and as the House will do if we pass the Bill.

Sir Giles Shaw: My hon. Friend the Member for South Ribble (Mr. Atkins), who is the Minister on the Front Bench at present, will not necessarily find that my remarks will give him the cheer that he has been waiting to hear. My right hon. and learned Friend the Chancellor of the Duchy of Lancaster and Minister of Trade and Industry has wisely decided to remove himself for the time being, and I can understand that.
Those of us — I include my hon. Friend the Under-Secretary — who have been involved in regional development policy, whether offering grants or receiving delegations, will know that there are few more important areas of ministerial life in which the incapacity to satisfy customers is at its greatest, and it is therefore not surprising that my right hon. and learned Friend—not one who is short of energy, determination and clout—should have decided that he wants to get shot of part of this operation by the quickest possible means, and therefore proposes to abolish the regional development grant.
I must echo the general view that if we are to have a policy for the regions at all it must, first, be seen to be creative and designed to correct the imbalances so widely recognised to exist between areas which have had a historic decline of basic industries and areas which have not.

Secondly, the policy should be attractive. It must seek to attract new types of industry which have not been able, so far, to obtain a footing in the area concerned. Thirdly, it should be competitive.
I welcome a large proportion of the contents of the White Paper "DTI—the department for Enterprise" which my right hon. and learned Friend the Secretary of State for Trade and Industry laid before the House earlier this month. But it is odd that, in the handsome document which has been handed down from the mount, the entry to chapter 7 on regional policy says of the DTI's objectives:
In all our work we will take account of the differing circumstances in the regions and of the Inner Cities to enable those who live there to help themselves".
That is an extraordinary, gratuitous observation. "We will take account" does not necessarily mean that we will do anything. The suggestion that there are "differing circumstances in the regions" is without doubt the case. There would not be regions if the areas were not different. They are different in culture, tradition, economy and many other ways.
I for one am wholly in favour of the diversity of regions. I do not entirely go along with the classic presentation of the north-south divide. I concede that many of us who are happy and proud to live in the northern areas have a different quality of life in many respects from those who live elsewhere.

Mr. Geoffrey Lofthouse: Which parts?

Sir Giles Shaw: I understand that the hon. Gentleman does not find the balmy air of Pomfret quite as happy as the bracing air of Harrogate, and I have to concede his point.
What underlying philosophy should be the basis of our regional policy? The opening DTI objectives in chapter 7 are pretty inadequate. It says, "take account". Is that really all that is required? It says, "to enable those who live there to help themselves." Is that really all that is involved? Frankly, it is not. One of the huge problems of regional decay is not the fact of the people living there not being able to help themselves, but the fact that people have left the area, that investment has been dissipated and has departed and that the age and condition of the basic economy have changed because the markets and customers have gone. Above all else, the regions need implantation—not the people who live there to help themselves but new people to come there with new ideas and activities and, we hope, to be a catalyst in trying to grow a new regional economy.
I am persuaded—I think that I carry my right hon. and learned Friend the Member for Richmond. Yorks (Mr. Brittan), who is practically a neighbour, with me—that a regional policy is but a small part of the national policy. National economic management is the crucial determinant of regional success. Hon. Members delude themselves if they believe any other general tenet of economics. Even so, we need an understanding of the fact that the parts of the country furthest from the centre of economic generation will be the slowest to respond. Equally, we must take account of the fact that persuading capital to move into those parts furthest from the centre of economic generation is a major and competitive task.
I understand that abolition of the development grant helps to get rid of the appalling problem of having each


time to go to the Treasury cap in hand and say, "We have overspent yet again because the applications have come in faster than we expected or have not been triggered in the time we expected." There is a bunching of payments and the DTI goes hairless in relation to its budget controls, so we have that wonderful Roman motto, "Per ardua ad moratorium." In it comes and first we have six months, then another six months, and so on. It is a mess and I agree that there should be reforms in handling it.
The essential objective of regional development grant is to provide to those likely to invest — investing companies—a clear statement of benefit, well in advance of the decision which they seek to make on whether to take investment to the location. Without that, the United Kingdom will be singularly naked when it comes to competing with other Governments for mobile investments within the European Economic Community. Are we to believe that, for example, the Irish are dropping their standard "Give all and take all and we will pay all"? Are we to believe that the French are dropping the way in which they attract investments by making massive grants available not just to new companies but to well-established companies which seek international orders?
If we try to rewrite history, I very much doubt that the Nissan motor company would have come to the north-east on the basis of the absence of regional development grant. I doubt whether Nissan would have taken kindly to being asked to show for the benefit of the DTI officials whether the project was sufficiently viable and whether it would have gone ahead without the Government grant that the company sought.
I believe that the Germans, the French, the Italians and, frankly, practically every other industrial part of Europe would be knocking on the doors of Nissan headquarters in Japan to demonstrate that in other markets they do not offer such restrictive rules. It may be that Nissan represented the last of the giant mobile investments, but equally there have been others, which I well recall from my time at the DTI, which have come to Telford and other places — other large Japanese investments in new technology that cost substantial amounts of capital.
Losing our competitiveness overseas to attract the big mobile investment is a major disadvantage. I do not believe that that is replaced in the present proposals by regional selective assistance. I accept that paragraph 7.10 of the White Paper says:
Internationally mobile investment projects will by their nature frequently meet these criteria.
But "by their nature" frequently they will not. They will not take kindly to the view that in the United Kingdom one must go through an enormously difficult and complicated procedure compared with the procedure in other parts of Europe. The speed and clarity of decision and the commitment which the United Kingdom Government can show in providing international investment will be seriously damaged by the current proposals.
I welcome many other aspects in the White Paper, which, of course, are not the subject of the Bill but relate to the way in which we must judge it. I look for a catalytic activity for regional investments. That is why I lay stress on competing for new industries, skills, types of people and management to come to an area rather than concentrating purely on the self-help issue for those who live in the

regions—crucial though it is that everything is designed to improve the lot of those who live there. Our regional policy should be designed essentially to be outward-looking. I do not think that the decision reached on this measure has come from an outward-looking view of how our regional policy should be developed.
I am especially interested in the fact that the business improvement services schemes are to be expanded and that consultancy schemes for various smaller companies are to be introduced. The White Paper contains much for the smaller developer, the smaller industrialist, and must do more if the enterprise culture is to be transplanted into the regions. I should like a single Government office to represent the whole spectrum of Government assistance and development within the regions. Why is a part of our businesses allocated to the Department of Employment, such as tourism, and a part to the Department of the Environment, such as the urban development corporations and small businesses? Why have we allowed that to happen yet are still required by the Department of Trade and Industry to believe that that Department and it alone is the source of the enterprise culture? It is a great weakness that the DTI does not have within its competence all those other forms of what are clearly investment potential and new activity. If those elements cannot be within the same Department, why cannot the three Departments be represented in one regional office under the same roof, so that there is a shop to deal with all the aspects that make a development project get off the ground?
Why can we not back the smallest of the entrepreneurs by providing regional directors of the DTI with a sum for which they could account entirely themselves, to show that they can provide small portions of capital for those who knock at their doors? It is easier in this country to borrow half a million pounds than to borrow £5,000. If we said to our regional directorate that we were able to provide it with such an incentive, much more could be done much more quickly.
Will someone explain whether the 27 new offices of the DTI are satellites running from the bigger regional offices, or new centres of advice and effort in themselves? I hope that the latter is the case, and that they will all be able to offer a service that will help to stimulate local activity in the towns and cities where they are set up.
It is never a good time to abolish a grant. I am certain that no one would willingly put up his hand and say, "Splendid. Do let us get rid of that portion of Government assistance." I believe, on the other hand, that it is sad that my right hon. and noble Friend and my right hon. and learned Friend have decided that the assisted area map should remain intact for the remainder of this Parliament.
My hon. Friend the Member for Corby (Mr. Powell) made an irrefutable point: when the objectives have been achieved of providing a development area with new industry and a new economy, and the position has become reasonably secure, why should not regional grant and regional selective assistance still be available? The answer is that the area has passed the point at which it is tied to the apron strings of Government assistance.
As I recall from my experience in the Department of Industry, two or three other areas in the United Kingdom are very close to being qualified for regional assistance and grants. Is my right hon. and noble Friend saying that this is for the remainder of this Parliament? It is sad if regional selective assistance is now to be the main generator of new


activity, apart from the new consultancy and advisory programmes, and that that too will be limited to the areas now defined. The business improvement schemes, perhaps above all else, have more application to small areas. I am thinking of such areas as Skegness and Thanet, which could be brought into some kind of net to provide some inducement for activity.
I am not entirely persuaded that the measure is a positive demonstration of the new enterprise culture at work, or that those of us who represent regional interests are yet of the opinion that the new policy will bring better results than the old. Secondly, there must be a cash equivalent of what has already been spent on regional development grant before we can be persuaded that the Government are being truly fair.
Let me say without doubt, however, that the political commitment to an effective regional policy is something that I wish the Government Front Bench to reiterate. It is no use looking at it on a haphazard, Treasury-required basis. A regional policy is a policy that brings commitment and important development prospects to most parts of the country — in the north, the midlands, Scotland, Wales and, indeed, Northern Ireland. Surely, therefore, it deserves proper backing to ensure that the resources are available to create new life where there was old.

Mr. Malcolm Bruce: The debate has taken a somewhat interesting turn after the opening speeches. Two speeches from Conservative Back Benchers have made it absolutely clear that support is lacking for the Bill, and for the measures behind it. The hon. Member for Pudsey (Sir G. Shaw) and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) have made their views known. But, when the statement was made, the right hon. Members for Chingford (Mr. Tebbit) and for Henley (Mr. Heseltine) also expressed considerable reservations. I therefore believe that the Government will have to take up very seriously the points raised in the debate.
Some hon. Members may know that, some years ago, I worked for the North-East Scotland development authority, and was therefore involved in trying to attract industry to my area. I can confirm without question that automatic availability of grant, which we then had in our area, was an essential component of even beginning a sensible dialogue with a potential investor. Inability to hold such a discussion will considerably undermine the possibility, first, in some cases of creating a new investment at all, and secondly—this is the point of regional policy — of ensuring that it goes to a specific location.
The Chancellor of the Duchy of Lancaster made it clear there was an element of cost containment behind the proposals. He said that, as the economy recovers and investment takes off, the availability of automatic grants leaves us with the possibility of an unconfirmable expansion of DTI expenditure. If that is really the Government's concern, would it not have been more appropriate simply to change, for example, the cost-perjob grant, while retaining the automatic guarantee, rather than bringing forward legislation to do away with those grants altogether?
A Scottish Minister is to reply to the debate. Is it not true that one of the major consequences of this supposed regional policy has been to dilute the ability of the regions to promote their own economies, and give more power to

Central Government officials in the DTI? Having been involved in industrial development promotion, l can tell the House that there is plenty of reason to be suspicious of how those officials might behave. I am not speaking of improper behaviour; I am referring to what might be termed political judgment.
For example, if a development authority or agency identifies a potential investor, it must almost immediately refer that investor, under the new rules, to the DTI. If the DTI likes the look of the investment, but feels that another region might be more appropriate, it immediately takes the chance to try to tempt the investment away. If that happens, it will understandably cause considerable resentment to the initial contact.
I do not believe that the Government, or any Conservative Members, ever supported the industrial development certificates, or would wish them to he reintroduced. Ironically, however, the Government are effectively creating a mechanism that could, in a sense, give the officials just that kind of power. I do not question the sincerity of the Labour party's criticism of the proposals being introduced at this time, but it is nevertheless Labour party policy — developing policy, at any rate — to do away with automatic grants.

Mr. Austin Mitchell: Hon. Members should not take his word for it.

Mr. Bruce: Indeed they should not. I have a copy of the New Statesman, which is not known as a Liberal newspaper. It states:
'A New Partnership, A New Britain', the keynote TUC-Labour Party statement of the last parliament, stressed that `it will be important … that industrial assistance is conditional on a business plan agreed between unions and management' ".
That is a condition that the Labour party may wish to impose. According to the New Statesman, the TUC states in its policy statement "Regional Development and Planning":
The amount of selective assistance … would be progressively increased until all assistance became selective".
In a sense, the Government are creating the mechanism, through the abolition of automatic grants, to enable a future Government of some other complexion to use the change to apply political and other qualifications to enable selective assistance to be given. That seems totally contrary to what the Government claim to be their regional policy.
The hon. Member for Sedgefield (Mr. Blair) and the right hon. Member for Glasgow, Govan (Mr. Millan), have already stated that there is substantial evidence within the DTI of the jobs that have been created in the regions because of the availability of grants since regional policy was introduced. Some of those jobs might not have been created at all without a regional policy, but many certainly would not have been in the regions where they are now located.
The recent change is the cause of the growing difference between the south-east and other regions. In the old manufacturing regions, one third of the jobs we re based in manufacturing, but in the south-east, only a quarter of the jobs were based in manufacturing. The consequences of the rapid decline in manufacturing have hit particularly hard all the regions of the United Kingdom except the south-east.
The Secretary of State for Trade and Industry is reported to want industry throughout the United Kingdom to play on a level pitch or field, to use his


colourful analogy. However, he ignores the fact that the field is anything but level now. It slopes very sharply from north to south. By removing the regional development grant, the Bill increases the difficulty of scoring goals in the north, and inevitably will accelerate the existing distortion between the south-east of England and the rest of the United Kingdom. I acknowledge, however, that there are differences within regions; I do not accept the over-simple north-south analogy.
Having been involved in industrial development promotion, I believe that changing the rules too often deters people from taking them seriously and that it has a depressing effect on investment. The hon. Member for Pudsey (Sir G. Shaw) has already drawn attention to the fact that competition for mobile international investment could lead to a serious loss to the United Kingdom, to which the Government should pay serious attention.
The argument has been proved that, effectively, the Government will be cutting the overall amount of aid. The Government have failed to satisfy the House that that is not the case. However, I am prepared to acknowledge that the amount of money spent on regional aid is by no means definitive proof that the policy is effective, or that it is reaching the right quarters. I am prepared to consider constructive ways of ensuring that the money is used effectively. However, so far, the Government have not convinced hon. Members that the Bill will achieve that aim.
The debate should be about how we can ensure that the regions take control of promoting their own economies, through regional policy. The Minister of State, Scottish Office, will be replying to the debate. As a Scottish Member, although I am not uncritical of everything done by the Scottish Development Agency, I am glad that we have such an agency and I believe that Scotland would be very much worse off without it. However, I wonder why the regions of England are denied the opportunity to have such agencies, so that, with a global budget, they could determine their own priorities and invest to tackle their regional problems. That would be more effective than DTI officials who, wherever they are located, are under the control of the Department in London. We should be moving forward in that way.
The right hon. Member for Glasgow, Govan (Mr. Millan) made the important point of principle that the ownership and control of businesses and location of their headquarters are crucial to the development of regional economies within the United Kingdom. The regions have suffered because corporate headquarters are concentrated in London and the south-east, to the detriment of all other regions. Indeed, 80 per cent. of investment in the regions of England is carried out by companies based outside those regions, in most cases in the south of England or abroad, to the considerable disadvantage of the regions.
Several consequences flow from that concentration, which have been acknowledged in some recently publicised cases. Scotland suffered because of the row over Guinness, but the location of the corporate headquarters was acknowledged to be an issue. Pilkington was subjected to a takeover, and nobody in St. Helen's could be persuaded that it would not be bad news for them. The shares of the company were substantially undervalued because the

parochial, London-based financiers persistently undervalue the assets of companies that are based outside south-east England. We need to find a way to decentralise financial institutions so that they know what is happening in the country, and can find opportunities for backing and investment.
The case of Britoil is another example. There is clear evidence that the BP bid — although it is not undervaluing on the basis of its knowledge—certainly in fact undervalues Britoil. I agree with the right hon. Member for Govan that an important point of principle is at stake.
BP is the largest employer in my constituency. It is a good company in many ways. It is a major operator in the North sea and has brought many highly qualified people to Aberdeen. That has been good for our economy. However, BP is now in the process of transferring 300 highly qualified staff from Aberdeen to the City of London. I do not know why on earth they need so many technical people in the City of London at a cost of tens of millions of pounds to the shareholders. I have tried to persuade BP that it should be moving the other way.
The importance of the North sea in my constituency is such that it could have established an exploration and petroleum division in Aberdeen. BP tells me that it wants to take over Britoil and to move its exploration and production division to Glasgow and Aberdeen. I find that very hard to believe, especially as BP is doing the opposite now. It does not square with its practice and its attitude. I do not trust it and I will not believe a Government assurance that that is true. The Government must use their power to keep Britoil independent, because the regions need such a focus. I shall develop that point, as it is relevant to the Bill.
We have two huge national privatised utilities —British Gas and British Telecommunications. I believe that, in a sense, the chickens have come home to roost, in that the problems of those monopolies are beginning to be recognised by dissatisfied customers. British Gas and British Telecom should be regionalised. As regional corporations, they could inject into the regions of England, Scotland and Wales corporate operations that would buy in services, offer careers, help to retain talent within the regions and start to regenerate regional economies so that people would not believe that the only way to get on was to leave the regions and go to London. Until we change that idea, we will not have a vital, growing regional economy, and the whole of the United Kingdom will suffer.
The Government are wholly unconvincing. I do not wish to denigrate the Chancellor of the Duchy of Lancaster's commitment to a regional policy, but it is on record that he thinks that the market will sort it out and that cheap labour in the north will attract investment. However, that has not been proved and we need something much stronger to ensure efficient distribution.
In a sense all hon. Members — even those who represent the south-east—represent regions, but those of us who live outside London and come here because of our duties in the House are aware that life in the south-east is not always rosy. Property is enormously expensive, travelling is a nightmare and congestion is a problem. The railway system is appalling, yet in the north many facilities are under-utilised and people are still leaving.
It seems that a more vigorous regional policy is needed for the whole of the United Kingdom. I am willing—all


hon. Members should be willing — to engage in a constructive debate to ensure that we achieve such a policy. The Bill is not achieving that, and the Government will have to think again. Even if the Bill is enacted, I suggest that the Minister should consider that if the Government go ahead with selective assistance, they should apply a simple criterion so that businesses will know quickly and fairly definitively, whether they will get aid. If the Government do not do that, the United Kingdom economy will suffer and the regions will suffer more than most. I believe that the Government should think deeply about that. This Bill is not the answer to regional problems.

Mr. William Powell: You have honoured me, Mr. Deputy Speaker, by calling me as the first speaker in the debate who is not a spokesman for his party or held ministerial responsibility for these matters in the past. However, for the past five years or so I have been up to my neck and beyond in the problems of the major town in my constituency which was devastated by the closure of the industry that was directly and indirectly responsible for 73 per cent. of the employment in that town. The House will recall that the decision to close Corby steelworks was announced on 3 March 1979. The significance of that date will be lost on no hon. Member.
As I have said, for the past five years or so I have been up to my neck in the problems of recovery. It has dominated my thoughts every day of my life and I want to share some of those thoughts with right hon. and hon. Members. I want to talk about what has been involved in the recovery, and what lessons there are for regional policy in our country.
This debate is now opening out into an interesting discussion of issues that are much wider than the contents of the Bill, and that is quite right. The contents of the Bill, although important, are only one small aspect of regional policy. If our regions are to recover, thrive and prosper in the future, one has to consider the whole range of policies and not merely one small part.
Although regional development grants have played a part in the recovery of Corby, many other factors have been more significant, including other Government policies. That perspective should never be overlooked. Although I am putting the issue in a wider perspective, I do not want any hon. Member to imagine that what has happened in Corby has happened for any reason other than major Government sponsorship of the recovery. Without that central Government effort and pump-priming, very few of the things that have happened in Corby would have happened. That is a lesson that no hon. Member should be allowed to forget or ignore. It is a lesson that has to be applied in other areas that are still facing hard and difficult times.
The indicators of what has happened in Corby are awesome. When I became its Member of Parliament, Corby stood at No. 20 in the national league table of parliamentary constituencies for those unemployed and claiming benefit. No. one is the worst and No. 637 is the best. It stood at No. 20 in 1983. In February 1987, when the Library did a survey it stood at 323. By November 1987, the latest survey, it stood at 371. During the course of 1988 and beyond it will drop lower and lower, and thank goodness for that.
A modicum of prosperity — I do not want to exaggerate it—has returned to my constituents. It is returning as a consequence of Government policy, including regional development grants. However, other factors have played a part. Perhaps I may be permitted to outline one or two of those which may be more important than regional development grant policies.
First and foremost, there is not the slightest shadow of doubt that derelict land grant has played a major role. The work of the Department of the Environment in sponsoring derelict land grant is fundamental and crucial. Without that, the steelworks would not have been cleared and the land could not have been prepared for companies to come forward and apply for regional development grants, selective financial assistance or any of the other forms of assistance available. Therefore, as I have said, the role played by derelict land grants in regional policy is crucial. I hope that we will see a quickening of pace in the use of derelict land grants. There is no doubt that the urban development corporations offer a hopeful opportunity and opening in that respect.
The second feature of Corby which is of considerable importance is that everybody in the community has been involved in trying to pull things together. It had been done without any partisan rancour and without any partisan disputes. It has involved Labour people and I pay tribute to them. They have done marvels in trying to promote the industrial regeneration of Corby. It has been done by Conservative people and people of no particular political persuasion. They have made use of the fact that the Government are available and taken advantage of what the Government have had to offer. They have not wasted their time in partisan ideological disputes about whether, if other people had held responsibility, things would be done differently. There is no doubt that, if one wishes to build the reputation of one's town and community, one has to persuade the outside world. The outside world is not impressed if local people are falling over themselves to show how they disagree with one another and how they are setting up a totem pole of resistance to this, that or the other.
I have no doubt that if there had been a different Government in Whitehall, Corby district council would not have behaved in a different way. It is to its credit that it has been prepared to work enthusiastically with Ministers of a different political persuasion. If I may be allowed a modest aside, I pay tribute to the way in which it has worked with me and tried to ensure that I am fully aware of what it wants for the town and that I am prepared to help it in every way I can. If I have managed to do that, I have managed to do something for my constituents.
The record of what has happened is awesome. It is not good enough to say that we will not look at the map again. At this time, unemployment in the Corby assisted area is already several percentage points lower than in any other assisted area in the country. I make a prediction to the House that it will get still lower. In the 1990s, Corby may still be an assisted area and still be able to take advantage of high unemployment when, in reality, it has low unemployment and other areas with high unemployment may have no Government assistance other than the 50 per cent. grant for firms with under 25 employees.
I welcome that grant and I am not criticising it. I am merely saying — I make this point about no other constituency because other hon. Members can make their own points—that people will point to the anomaly of


special sponsorship and special incentives available to a place which on any criteria does not need them. The people of Corby agree that. I am not making any point against my constituents. They are grateful for what they have received and they understand that it is no longer necessary for them to receive it. So great and powerful is the economic locomotive that is now gathering speed that it is unnecessary to have Government assistance.
The problem we will face in the future is not that of unemployment but of not having enough people for all the jobs. There is a danger that the problems of surplus jobs will be aggravated by policies that encourage people to set up businesses but then do too little to encourage people to move into the area to meet the jobs on offer. We are not facing that crisis yet, but we will before the end of this Parliament: of that there is no doubt. In 1983, 7,000 people were out of work and claiming benefit. The figure is now down to 2,600 and in all likelihood it will be comfortably under 2,000 by the end of this calendar year.
But of course there are problems for those who remain out of work, and regional policy must concentrate funds on those who have been unemployed for a year or more. A significant number of my constituents have been unemployed for a long time. Indeed, they were unemployed even when the steelworks was going like the clappers, and getting them into work so that they can support their families and have all the things that we naturally wish for them will require considerable investment in training.
I welcome the passages on training in the White Paper, but I add a word of caution to my right hon. and learned Friend the Chancellor of the Duchy of Lancaster and to my right hon. and noble Friend the Secretary of State. They must beware reinventing the wheel with all their schemes. Many schemes which have already been working on the side could be developed into fine instruments to helping training and development. The actions of the Department of Employment, the Department of Trade and Industry and the Manpower Services Commission too frequently give those involved on the ground the impression that the wheel is in danger of being reinvented several times each day. It will be necessary to inject some regional and local experience into the natural enthusiasm of central Government policy-makers and planners.
Since 1981, the assisted area of Corby has received £58 million in regional development grant, and we are grateful for all of it. But it is not enough to say that all the £58 million has helped. Much of it has helped, but if one analyses, as I have, the companies which have received more than £5,000 in regional development grant and selective financial assistance since 1980 — the Department's monthly gazette gives all the figures—one sees some interesting facts.
The three biggest recipients of regional development grant and selective financial assistance have been, first, a nationalised industry — British Steel — which was responsible for the job losses in the first place. That delicate irony never ceases to amuse me. Secondly, two international companies with British headquarters but with enormous assets abroad, neither of which is believed to be short of money, have set up plants in Corby which the taxpayer has subsidised heavily. They are magnificent plants. They are welcome, but they are employing only a few people. It is not enough to ladle out money for capital

projects which firms could afford in any event. We must keep our feet on the ground and realise that our policies should be aimed at areas of high unemployment.
Fortunately, in 1984, the Government made a change. If one analyses grants that are made now, one notices the sea change. At first, grants were given to firms of high international profile, such as British Steel, and to other less high-profile companies. The burial ground for the latter is a devastating spectacle. But since 1984 there has been hardly a single failure, because the grant has been so tightly tied to the creation of jobs.
No company which comes to Corby now does so because of a grant. That used not to be the case. They come to Corby because it is a good location with an improving reputation and improving local infrastructure and because some—but by no means all—of their bills are paid for them. That is as it should be, but when the Government hand out too much money to companies, failures will occur because companies will then come for the money rather than to improve their business. If they come when it makes sense in their business to do so, that will improve the regions. But even that must be qualified by several factors.
The right hon. Member for Glasgow, Govan (Mr. Millan) made a powerful point about the headquarters of Britoil, and I was with him every inch of the way when he talked about that. The point was also made by the hon. Member for Gordon (Mr. Bruce). What has gone so badly wrong during the past generation—not only in the past few years, but since the second world war — is the decline of regional influence. Two aspects of our national policy, which must be corrected, have caused the decline more than anything else. The first was nationalisation. It centralised in London and destroyed many regional companies. It was disastrous in terms of decision-making for the regions. Nothing could cause more damage than more nationalisation. It would undermine completely any effective regional decision-making because all the decisions would be made in London, usually by Ministers.
The second factor is capital taxation. There is no escaping the damage caused to regional infrastructure by our system of capital taxation, which means that family companies are one-generation companies. They can fund the inheritance tax, or capital transfer tax as it used to be called, only out of the active assets of the company, and they automatically become extremely vulnerable to takeovers. They have been taken over one after another. Pilkington is the only major company with its headquarters in the north-west, because the structure of capital taxation has destroyed all the others.
If there is one point which I hope my hon. Friend the Minister will pass on to the Chancellor of the Exchequer, it is that, if the Government are serious about a regional policy, the sooner that businesses are relieved of having to pay inheritance tax the better.
My right hon. Friend the Member for Henley (Mr. Heseltine) has often said, rightly, that not only does capital taxation destroy family businesses but, worse, the companies which take them over are subsidised by rollover relief from corporation tax. Those companies are destroyed by capital taxation and the people who take them over are subsidised. Unless those two factors are faced—they are central to regional policy—all the other matters will be at the margin.
The Bill must be put in context. The system of regional development grant improved after the changes made in


1984, which I warmly supported. I share the scepticism and anxiety expressed by my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) and my hon. Friend the Member for Pudsey (Sir G. Shaw) about the future. Although selective regional assistance is a valuable—weapon it was certainly a valuable tool used by the Government in transforming my constituency—unless it absorbs all the money that is being spent on regional development grant, there will be difficulties in the 1990s.
Opposition Members like to play a game about what the sums will be in the 1990s. They know perfectly well that neither this Government nor any Labour Government have been able to project that far ahead. In the next public expenditure review and thereafter, my right hon. and learned Friend and his colleagues will have to press to ensure that the level of assistance available to the regions remains buoyant because there is a vital gearing and pump-priming role that only the Government can play. If we run away from that, we will make it more difficult for the regions to develop again the kind of prosperity that so many regions had in the past.

Mr. Stan Crowther: I must tell the hon. Member for Corby (Mr. Powell) that the steel industry has got rid of far more jobs in my constituency than in his. The difference is that the jobs in my constituency did not all go at the same time. They went over a longer period, so those job losses did not cause the Government to leap into action. In that respect, Corby was far more fortunate than Rotherham.
In opposing the Bill, I do not want to give the impression that I believe that everything is fine so long as we keep regional development grants. It is not. The blunt truth is that no Government have yet managed to produce a really effective regional policy. I said in my maiden speech nearly 12 years ago—I have said this on many occasions both before and since—that the great need is for massive public sector intervention involving many Government Departments, local authorities and the establishment of regional enterprise boards and development agencies with adequate resources to ensure that they can initiate investment on a very large scale. The important point is the initiative role. While the Government and their agencies have no more than an essentially reactive role, we shall never solve the problem.
I appreciate that this is anathema to Conservative Members, but free market forces have created the problem. It is daft to imagine that free market forces can solve the problem, however much we may tinker around the edge with financial incentives, here and there. That will not produce a solution. The carrots have not worked, and no one wants to use the stick. The Government are offering a change of carrot today, but I suggest that we really need a change of donkey.
The position, after many years of so-called regional policy, is that the regional imbalance that the policy was supposed to correct is worse today than it has ever been in terms of employment opportunities, income levels and—very importantly—investment in the modern sunrise industries to which the Chancellor of the Duchy of Lancaster and Minister of Trade and Industry referred. The gap is wider than ever after all these years of what have been called regional policies, but were not.
There is a fundamental difference between this Government and their predecessors. In the 1960s and 1970s Labour and Conservative Governments at least made a genuine effort to reduce the differences in the levels of economic activity between different pans of the country. I accept entirely that without those efforts the position would have been much worse. My hon. Friend the Member for Sedgefield (Mr. Blair) referred to the 600,000 jobs created or saved as a result of regional development grants. That is a very important fact for us to bear in mind.
However, those 600,000 jobs are nothing like enough to close the gap to remove the enormous imbalance. For the first time, the Government are moving in precisely the opposite direction through their economic, energy, transport and local government finance policies. They are widening the gap year by year. I can only assume that they are doing that deliberately. They could change their policies if they wanted to do so. Even in the limited area covered by the Bill, including the regional development grant and regional selective assistance, the amount of cash available has been reduced dramatically, as my right hon. Friend the Member for Glasgow, Govan (Mr. Milian) said.
In my region of Yorkshire and Humberside, in the last financial year, the total amount of cash available for grant purposes was £37.1 million, compared with £54.2 million only five years before. Allowing for inflation, that means that the figure has been cut by at least 50 per cent. Yet that region has enormous potential for development. The region is working hard through the local authorities and regional development association to help itself and it has had some notable successes. It deserves more recognition from the Government, and it needs more Government support. We are not a begging bowl region. W e are not asking for handouts. We are asking for investment, and the Government are failing to provide it.
Ministers tell us ad nauseam how marvellously strong the economy is now. We hear that every week from the Government Front Bench. Only today the Chancellor of the Duchy of Lancaster used the phrase "the rising prosperity of the nation". Perhaps some people are doing very well. Indeed, when I see fairly ordinary houses offered for sale in London and parts of the south-east at £500,000 or one-bedroom flats at £120,000, I am bound to conclude that somebody must be doing quite nicely, thank you. If all this prosperity exists and if the economy is so strong, why have the benefits not filtered through to south Yorkshire, west Yorkshire and other areas that have suffered such pain and anguish as a result of the collapse of our manufacturing industries under this Government's reign?
Ministers should remember that they have a responsibility for the whole country, not just for those areas that loyally return Conservative Members after every general election to ensure that some people can continue to pay £500,000 for a house while others cannot get one at all. My constituents are not asking for the moon. They are asking for the right to earn an honest living. They are asking for the opportunity to do a proper job. All that the young people want is real jobs with a future. They do not want a cosmetic scheme that keeps them involved in some activity for two years and then throws them on to the dole. Like many of the Yorkshire constituencies, represented by my hon. Friends, mine contains areas in


which more than half the people available for work are registered unemployed or actually unemployed but not included in the Government's highly manipulated figures.
The Rotherham and Mexborough travel-to-work area has an official unemployment level of 19 per cent. That is a reduction over the past three years from 21 per cent. However, 19 per cent. is an appalling figure. Will the Bill do anything about that? Will it provide jobs for those people who desperately need them? I cannot see how it will do that. In fact, the position is about to get worse. More jobs will be lost in the steel and coal industries. In the constituency of my hon. Friend the Member for Wentworth (Mr. Hardy) a long-established glass works is about to close, with the loss of more than 400 jobs.
Of course there have been good developments. A number of new, small, well-run businesses have been established, and we welcome them. They have had a lot of assistance from the local authority and the Rotherham enterprise agency. They have also been assisted greatly by the availability of regional development grants. Those grants have played a crucial part in creating what is admittedly a comparatively small number of new jobs, but at least they are new jobs. The Minister assures us that selective assistance will increase to make up for the loss of RDG, but it still means that a company which is thinking about setting up in an assisted area no longer has any assurance that Government aid will be available.

Mr. Terry Patchett: Does my hon. Friend agree that the Bill simply shows that, because the Government could not win those regions at the ballot box, they are abandoning them? They could not win the metropolitan counties, so they destroyed them. They cannot win at the ballot box regions which desperately need this grant, and the Bill handicaps any future prospects for those areas.

Mr. Crowther: There is a great deal of merit in what my hon. Friend says. It is no accident that most of the areas which so desperately need public sector backing to bring them up to something approaching the level of prosperity of the south-east, send Labour Members to this House. I do not think that the Government could care less, so long as they are able to keep a large majority without the aid of many people in Scotland and the north of England.

Mr. Kevin Barron: Any reduction of grant to the areas represented by myself and my hon. Friend will be measured by the number of jobs available to 16-year-old school leavers. I am sure that my hon. Friend is aware that 80 per cent. of those who left school in July in our areas have been unable to find work.

Mr. Crowther: My hon. Friend is right. I referred to that point a few minutes ago. That will be the crucial test. The Bill will do nothing for those thousands of young people who desperately need proper jobs with a future.
I mentioned the difficulty that will be created by uncertainty about the availability of grants. It has always been in the power of Governments to change the criteria. All Governments have changed their criteria from time to time. When a company was able to meet the criteria, it was guaranteed that the cash would be there. That will no longer be the case. The Government are moving the goal posts and saying, "Even if you get the ball between the

posts, there is no guarantee that you have scored a goal." That will cause immense problems. It should be borne in mind that automatic grants will continue in assisted areas of France, West Germany and the Netherlands, which compete with us for inward investment from Japan, the United States and elsewhere.
Perhaps the Government have not attended to that point properly. The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry told us that, in such cases, regional development grants are not important in making decisions. I do not believe that. The evidence points the other way. Regional development organisations, such as the Yorkshire and Humberside Development Association which I helped to set up almost 16 years ago, will now face even more difficult circumstances in competing with people from other parts of the Common Market. They are already operating in a highly competitive international environment. Ministers do not appreciate how competitive it is. The Bill will certainly not help those people. It will make life far more difficult for them. It will do nothing to help those areas which are short of jobs and which need new industry. It is a thoroughly bad Bill and it should be defeated.

Mr. Tim Smith: There is a marked contrast between the constituency of the hon. Member for Rotherham (Mr. Crowther) and my constituency of Beaconsfield. Given that there is 19 per cent. unemployment in the Rotherham travel-to-work area and that unemployment in my constituency is so low that it does not pose a real problem—we have a shortage of labour — what is the most effective way of tackling this problem? What can the Government most effectively do to help?

Mr. Patchett: Give us jobs.

Mr. Smith: In response to the hon. Gentleman, the Government cannot create jobs.

Ms. Armstrong: Will the hon. Gentleman give way?

Mr. Smith: I am responding to the hon. Gentleman's sedentary intervention. The Government cannot create jobs, but they can create the conditions in which jobs are more likely to be created.

Ms. Armstrong: I am grateful to you for giving way.

Madam Deputy Speaker: Order. I am not giving way.

Ms. Armstrong: I am grateful to the hon. Gentleman for giving way. The Government create many jobs by the direct aid that they give in such matters as defence contracts and research and development grants. That is one of the main ways in which the Government have been aiding the boom in the south-east and making sure that the north does not get its requisite amount of money. For example, in the past two years, 50 per cent. of Government money for research and development went to the southeast and 3 per cent. to the north.

Mr. Smith: Of course, that may be the case, but the Government can spend money on defence only if the wealth is created in the first place and taxes are raised to pay for the defence contracts. We are discussing the wealth creation process, how we can create the wealth which will create the jobs that we all want.
I have listened to today's speeches with great care. The hon. Member for Sedgefield (Mr. Blair) appeared to be


saying that the acid test is the quantity of spending, not the quality. The success of Government policies should be assessed not by how much money is spent, but by the success of the policy in practice, and whether it proves cost-effective.
The extracts quoted by the hon. Member for Sedgefield from three Department of Trade and Industry reports, particularly the second extract, could equally well have been used to support the policy promoted by the Government in the Bill. If I remember the figures correctly, one of the reports stated that 25 per cent. of the investment projects under RDG would have gone ahead anyway. That is precisely the point—a large proportion would have gone ahead anyway. Selective assistance will ensure that only those projects which would not otherwise have gone ahead will go ahead with the support of taxpayers' money.
In an editorial of 13 January, The Independent stated:
The existing system of automatic regional aid has not been notably successful: it has been exploited by large companies to subsidise investment that would anyway have taken place.
Those are not my words. They are the words of The Independent, a newspaper not always noted for supporting Government policies.
I welcome this Bill as part of a package of measures which ensures that regional assistance will, in future, be selective and directed to those projects in most need of it. Applicants for regional selective assistance will have to show that assistance from public funds is needed for a project to go ahead. In other words, the taxpayer will not in future be supporting investment projects that would have gone ahead anyway, without his support.
The National Audit Office has recently conducted a review of regional support. it is unfortunate that that report is not yet available to inform our debate, but I should be surprised if the Comptroller and Auditor General does not question the cost-effectiveness of automatic RDG.

Mr. Malcolm Bruce: Is the hon. Gentleman aware that the academic report carried out by the Department of Trade acknowledged that many of those projects would not have gone ahead in assisted areas without the grant? How does he respond to that?

Mr. Smith: That may be the case, but my understanding of regional selective assistance is that, if it can be demonstrated to the satisfaction of the Department of Trade and Industry that, if assistance is not given, the project will not go to the regions, regional selective assistance will be available. I may have got that wrong, but it is my understanding that, in those cases, assistance will still be available. That is the point of regional policy—to direct investment to the regions.

Mr. Hind: Is there not some misunderstanding on the part of many Opposition Members about the nature of regional selective assistance? My local council and I are helping to obtain a major investment in our area, which is being considered by the Department. About £1.75 million of that investment is RDG, and £14 million of it is regional assistance. Surely there is a clear message to Opposition Members that the majority of effective aid that is required for major development areas must be regional selective assistance.

Mr. Smith: My hon. Friend obviously has more experience of such matters than I have. He is right. We

must consider the most cost-effective way of combating unemployment in the regions. As I said, there is virtually no unemployment in my constituency today. That is true of many constituencies in the south-east. The latest quarterly survey from the East and South Buckinghamshire chamber of commerce tells me that home and export orders are moving ahead well, businesses are profitable and expanding, and cash flow is positive. The main restraint on growth is a shortage of labour.
To a limited extent in the south-east, it is possible to employ people from areas of high unemployment. The jobcentre network advertises vacancies nationally. The South Buckinghamshire district council can employ a lorry driver from the north because it can offer him a house to go with the job. Some employers offer mortgage subsidies to people from the north whom they particularly want, to combat our high house prices. But, for most people, the lack of reasonably priced housing is an insuperable obstacle. Furthermore, I am constantly pressed by my constituents to support — indeed I do support it — a restrictive planning policy that will preserve the green belt and ensure that we do not become overdeveloped.
We will not solve the problem of regional unemployment in the north by recruiting in the south. Instead, we must make it more attractive for employers who are restrained by a shortage of labour to relocate in their entirety in the regions or invest in new capacity in the regions. We must create a new business climate in inner cities—a climate that is friendly rather than hostile to wealth producers; a climate of incentives rather than disincentives.
We need systematically to look at each of the costs of running a business, over which costs the Government have some influency or control. The two most obvious costs are rates and national insurance contributions. The uniform business rate that is proposed in the Local Government Finance Bill 1987 will have precisely the desired effect of substantially reducing business rates in inner-city areas of the north and increasing them by a corresponding proportion in many areas of the south.
Wage rates are already lower in the north than in the south, but the Chancellor of the Exchequer may wish carefully to examine the proposals that have been made for lower national insurance contribution rates in assisted areas.
There are also the costs that businesses should carry if they are satisfactorily to grow and develop. But such costs may be perceived by small and medium-sized firms as too expensive and just not worth it. Such costs are ro be subsidised by the enterprise initiative. They include the costs associated with achieving better design, improved marketing, superior quality of management and high-tech manufacturing systems. It is right that the enterprise initiative should discriminate in favour of assisted areas and urban programme areas by offering higher rates of grant to businesses that take consultancy advice.
Because the general level of economic activity is lower in the regions than in the south, starting a business from scratch is less easy. Yet, given the traditional dependence of some regions on a few large businesses, the growth of the independent business sector is urgently required. Only then is economic growth more likely to become naturally self-generating. For that reason, the White Paper proposal to offer grants to firms in development areas that employ fewer than 25 employees is especially welcome.
Investment grants for investments and fixed assets of £100,000 or less and innovation grants for investments in product and process developments of £50,000 or less will be a major incentive for small firms. All such measures will be far more cost-effective in stimulating enterprise in the regions than the scatter-gun approach of regional development grants.
Some have said that at least RDG involved an element of certainty and that it is unfair to impose on officials such a subjective decision-making process as is involved in administering selective regional assistance. The RSA scheme is not new. Objective published criteria are already built into it to determine whether public funds are needed for a project to go ahead. Such decisions need to be taken at a local level and with some private sector input. That is precisely what happens at present through the Industrial Development Advisory Board. The Scottish Development Agency, the Welsh Development Agency and the expanded network of local DTI offices in England will be best placed to do that work against the background of nationally set criteria.
Regional selective assistance will be particularly effective in ensuring that the United Kingdom continues to attract mobile inward investment and to qualify for help from the European regional fund. There is no reason to mourn the loss of RGD. Therefore, I commend the Bill to the House.

Mr. Giles Radice: After reading the White Paper, hearing Lord Young in another place, hearing the Minister and the hon. Member for Beaconsfield (Mr. Smith), Opposition Members must make anew the case in principle for regional policy. Put in its simplest terms, the case for regional policy is that unbridled market forces accentuate rather than decrease disparities and differences between regions, particularly between north and south.
According to classical theorists, the existence of unemployment in depressed regions is meant to force down wages. I have often heard the Minister saying things that demonstrate that he would support that idea. Apparently, that will induce employers to hire more workers. The theory is that at the same time as new factories open in depressed regions to take advantage of lower labour costs, workers in the north will migrate south in pursuit of higher wages. In that way, so it is argued, disparities will be ironed out. That is the classical theory, but it is not in fact what happens. Reality does not correspond to the simple market model.
There is a lack of adequate housing in the south—we heard about that from the hon. Member for Beaconsfield —and a lack of so-called job opportunities. I am glad that wages are kept relatively high in the regions by national and multi-plant bargaining. Theoretical economists forget that a fall in wages will mean reduced regional purchasing power, which will mean reduced income and, therefore, reduced employment in depressed regions.
There is the further point that reliance on labour-intensive industry alone, as in the classical model, does not produce the balanced growth that is required in the regions. Of course, more fundamentally, a simple market model ignores some of the underlying causes of regional differences and disparities, such as the crucial geographical

distance between the centre and the periphery, which is the key to regional imbalance, the concentration of headquarters and research and development in the south, and the different structures of regional economies and markets. Most important of all, it ignores social needs and overall national economic requirements.
We simply cannot afford to consign any region to the scrapheap. Because Governments, Conservative and Labour, have recognised that simple point, they have supported regional policy. Indeed, a Conservative Government first introduced regional assistance—albeit on a limited basis — in 1934. In the early 1960s, Macmillan's Government first recognised the north-south divide in its modern form. The right hon. Member for Old Bexley and Sidcup (Mr. Heath), the architect of the Industry Act 1972, first introduced regional development grants in their present form.
Hon. Members on the Government Benches forget or ignore what my hon. Friend the Member for Sedgefield (Mr. Blair) has told them: that regional policies have been effective. Department of Trade and Industry economists have shown that, because of regional policies, there had been an increase of between 350,000 and 630,000 jobs by 1981 in the assisted areas, a large number of which were created by regional development grant. Without a regional policy, therefore, the situation would have been far worse than it is.
The truth is, however, that the case for regional policy is even stronger in present conditions—hon. Members representing the north know that the north-south divide exists—because there is no better time to have a strong regional policy than when the economy is expanding. It is precisely when the national economy is expanding generally that firms are more easily encouraged to expand in assisted areas; and, if we want the national economy to go on expanding, we have to prevent the south from overheating. Regional policy which seeks to spread expansion will help not only the north but the south, and so keep national expansion going generally. So it is a very good time to have a strong and active regional policy, but a very bad time to get rid of automatic grants.
The Department of Trade and Industry report has shown that RDG saves and creates jobs, yet in this Bill we are moving right away from automatic grants, and neither we nor the Minister can be certain that selective grants will be as effective in saving or creating jobs, particularly when other countries are continuing to use automatic grant.
We have heard about the problems for larger firms. The right hon. and learned Member for Richmond, Yorks (Mr. Brittan), a former Secretary of State, made the point very effectively when he intervened with a question on the statement two weeks ago. He said:
there were real advantages in a system where a business man was aware that, if he satisfied a published criterion he was entitled as of right to regional assistance instead of having to go cap in hand to civil servants". —[Official Report, 12 January 1988; Vol. 125, c. 151.]
The right hon. and learned Gentleman might also have pointed out that in that case the business man would not have had to pay tax on automatic grants.
Today, only one third of the money is under the direct control of civil servants; in future, all the power will be in their hands. I do not criticise civil servants. On the whole, I believe that they do a good job, particularly in the northern region. But this Bill represents a major increase in Civil Service power, with all the temptations and


possible abuse that that can bring, quite apart from the fact that civil servants will now be able to delay, turn away and squeeze the overall budget as Ministers in Whitehall dictate.
What about small firms? We have heard from the Minister that his scheme will prevent the bad impact of removing automatic grants, but I know from my own constituency experience that small firms do not have the know-how, the time or the back-up to apply for selective grants. The scheme that the Minister is introducing will not be automatic, and he has not said that it would be, despite questions from hon. Members. In any case, it applies only to firms employing 25 people, or fewer, and not to firms which employ 26 or 30, 50 or 60. The fact is that small firms will be hit by the move to selective grants.
It is true that in the White Paper the Minister makes much of the regional aspect of the business development initiative and the fact that there will be help for small firms in the regions, but my hon. Friend the Member for Sedgefield has shown that much of that assistance will be spent in the south. In any case, I am extremely sceptical about the utility of such large resources going to such a scheme. I can see that it is very nice for consultants. Money will pour into the coffers of consultancy firms, and it will pour in irrespective of any ultimate utility or positive achievement. It is not payment by results at all, and it is certainly a bonanza for consultants. I cannot believe that such an expensive scheme will show a good return to the regions.
I am deeply sceptical about the Government's commitment to continue to spend money and resources in the same way as now. The Government invite us to look into the crystal ball, but, to quote a famous Socialist, one does not need to look into the crystal ball when one can read the book. The book says that the Government cut regional aid by £300 million between 1979 and 1986, that they will cut regional aid by £300 million this year and that regional expenditure in the north is only 43 per cent. of what it was in 1978–79. With that kind of record, we are bound to be very sceptical about promises for the future, particularly when the Minister actually showed during his speech—and when he refused to answer the questions from my hon. Friend the Member for Sedgefield—that he has tried to fudge the White Paper figures.
The tragedy is that the present economic expansion could provide an excellent background for an effective, sustained and adequately financed regional policy which would be a real partnership between central Government, local government and industry, a partnership to revitalise the regions.

Mr. Dennis Turner: Does my hon. Friend agree that the Government have signally failed to recognise and support a most effective instrument of regional intervention, such as the regional enterprise boards? In my own area, the West Midlands enterprise board has, over the past five years, helped in the creation of 3,500 jobs, invested £40 million and assisted 41 companies in the process.

Mr. Radice: I entirely agree with my hon. Friend. We in the northern region would like to have such a development agency. We have put the case for one to the Government on many occasions, but they have failed to accept it. My hon. Friend has drawn a useful analogy.
Instead of supporting this kind of partnership, instead of expanding regional policy—as they could do with all

the money they have — the Government — partly, I suspect, to satisfy Lord Young's vanity—are once again changing regional policies. They are making changes which seem designed not to reduce regional disparities but to decrease the amount of money spent on the regions. This is a thoroughly bad Bill. It is inadequate and irrelevant to the real needs of the regions.

Mr. James Cran: I want to make my contribution to the debate this evening against the background that I too am a Member from the north and not from the south and that, before coming to the House, my experience as northern director and also west midlands director of the Confederation of British Industry has given me a unique insight into how regional policy in this country has worked—or, as I contend, has not worked at all.
I listened very carefully indeed to the extremely eloquent speech of the hon. Member for Sedgefield (Mr. Blair). What he was really telling hon. Members and anyone who reads the record was that regional policy in its classical form would solve the problems of this country. I heard it also from the hon. Member for Durham, North (Mr. Radice), who said that all we need is more resources. What I shall say has already been said but I do not mind mentioning it again because I think that every hon. Member should continue to look at the facts of regional policy. I took the trouble to look at those facts and to find out that, over the past 20 years, between 1964 and 1984, successive Governments of all complexions have spent about £20,000 million on regional policy. So 1 find it extraordinary that we have had the proposition continually put to us from Opposition Members that resources have not been put into regional policy. 'They have been put in with a vengeance.
The record, shows—there is variation in the statistics —that about 500,000 jobs have been created. I would be the first to say that those jobs were valuable, but they were not enough for the money that we put into regional policy in the past 20 years. At a cost of £35,000 or £45,00() per job, it has been a dramatic failure, of the classical form, in regional policy. That does not mean that I do not want a regional policy. The argument between myself and Opposition Members is what sort of regional policy we should have.
With regard to my experience in the north of England, where I spent five years, what did regional policy do of which any of us could be proud? Some 80 per cent. — plus of people employed by companies in the north of England were employed by companies whose headquarters were not in the northern region. The hon. Member for Gordon (Mr. Bruce) made great play of the fact that there are insufficient company headquarters in the regions. However, he did not tell us how to attract them. Regional development grants will not attract them to the north of England or anywhere else; they will lead to a dependent economy. I found a low level of management in the region, with no autonomy to take decisions for the good of the companies or the region.

Ms. Armstrong: Will the hon. Gentleman give way?

Mr. Cran: The hon. Lady has had ample time to make her case. She should listen for a change.
I also found in the northern region—it is the same in the other regions that Labour Members have been talking


about — that there was little or no research and development capability. One of the prerequisites of any successful regional policy is such a capability. I know that you do not like to look at unpalatable facts—

Madam Deputy Speaker (Miss Betty Boothroyd): Order. I do not mind looking at unpalatable facts.

Mr. Cran: I am sorry, Madam Deputy Speaker.
The past 50 years of regional policy, although it has been well-meaning, has been relatively ineffective. All it has produced — if anyone can produce facts to the contrary I would love to see them—are fragile, lopsided, recession-prone, drip-fed regional economies. That is what 50 years of resources being pumped into the regions, in the amounts of which Labour Members approve, has done.
Not only has regional policy been ineffective; it has been positively destructive. During my experience in the north I found that it encouraged the big company job mentality—one gets a job down the end of the road, where everybody has done so for the past 50 years. That is destructive; understandable, but destructive.
At one time, the west midlands — this is a phenomenon of which we are all aware—was one of the most prosperous regions of the United Kingdom. It had no assisted area status. Then it fell on hard times. Why? That is the salient question. There were many reasons. One was that given by the hon. Member for Gordon —interventionism of the Government that we have experienced in regional policy for some time.
There were industrial development certificates. The policy behind them was that the Government operating from the south-east had to redistribute industry throughout the United Kingdom. My goodness, they did that with a vengeance. The automotive industry left the west midlands. Ford went to Halewood, Standard Triumph went to Speke, Rover went to Cardiff and Rootes went to Linwood. Need we go further than to remember what happened to Rootes? The natural home for that investment would have been the west midlands. Unfortunately, what interceded was regional policy of the classical kind that Labour Members want to perpetuate.
Early-day motion 569 says that the House
views with alarm the Government's plans for further cuts in support for regional industry under the guise of selectivity.
I was present when regional policy for the west midlands was being discussed. At that time it did not want a regional policy because it knew how destructive it could be. It was pulled kicking and screaming into regional policy, and I suspect that it was correct in not wanting that regional policy.
Regional policy has clearly not succeeded according to the standards that I, not Labour Members, set. All it has done is provide a temporary jobs lifeboat. If the standards of Labour Members are as low as that, it is no wonder that it has taken us so long to re-evaluate regional policy. It has attracted only closure-prone production units to the regions of the United Kingdom. I hope that in the next 50 years we shall not experience the sort of regional policy that we have had for the past 50 years.
The ultimate judgment of regional policy is that when I have looked at the assisted area status map of 1934—it would be interesting to know how many people have done this—and compared some of the areas on it with those on the present map, I found that a number of areas

on the first map are present on the second. We have been unable to remove some of those assisted areas from the map, which is definitive proof that something has been dramatically wrong with the policy.
I agree with those who have said that regional development grants are wasteful. I shall not desist from reminding the House that we gave £100 million for a capital-intensive project at Sullom Voe, which, at the end of the day, produced very few jobs. I gathered from what was said by Opposition Members that regional policy should be judged by the number of jobs that it produces. That investment produced very little. Many of us believe that that investment would have gone to Sullom Voe anyway. There was probably nowhere else for it to go, so we wasted £100 million that could have been better spent in other regions of the United Kingdom. The tragedy of the matter is that that is not only one such example. There are many.
There are further weaknesses in regional development grants policy. Multinational companies, which, as we all know, are very sophisticated outfits, are extremely adept at using the system of regional development grants to set one country or one region against another. That is not how we should run regional policy. Regional development grants, or regional policy as we know it, have not taken into account how industrialists operate and think. I think every hon. Member will agree that if someone throws money at us, we catch it. It is human nature, and that is what has been happening with regional development grants, for as long as I can remember or for as long as anybody with any knowledge of this system can remember.
As for the PIEDA report sponsored by the DTI in 1987, I must confess that I distrust some of the answers because they are enormously at variance with much that I have heard from the industrial community in the past 10 or 15 years. Before Labour Members smile too much about that, I remind them that that report told me that 71 per cent. of companies said that location was not affected by regional development grants and that is why I am doing as much as I can to support what I think is an enlightened and far-seeing Bill. We need other ways to strengthen the regions of the United Kingdom. I am clear about that. The Government will retain my support only as long as they say that that is their aim. I have heard nothing from the Government to say that that is not their aim. That is why I support the Bill. I only mourn the length of time it has taken for us to get here to talk about it. I strongly support the Bill.

Mr. Geoffrey Lofthouse: I was interested in the speeches made by the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) and by the hon. Member for Pudsey (Sir G. Shaw). I recognise that they may be suffering from an incurable disease of this House—"out-of-officeitis"—but I find that when people of experience have something to say that arises out of their experience in office, once their personal ambitions have gone one sometimes gets the truth. I hope that the hon. Member for Pudsey was convinced by some of my visits to him when he was a Minister, because much of what he had to say covered points which I want to make this evening.
In the earlier speeches in the debate made by the Chancellor of the Duchy of Lancaster and my hon. Friend the Member for Sedgefield (Mr. Blair), figures were'


thrown across the Floor of the House in disagreement. However, I was certain of one thing—none of them would be coming to my area. 1 think that everyone will agree that regional policy does not mean a thing if it is not effective. If regional policy, White Papers or Bills do not take into consideration parts of the country and areas of the regions with severe unemployment problems, then the Government that have produced the White Paper or the Bill are not facing up to their responsibility.
Paragraph 7.1 of the White Paper called "DTI — a department for Enterprise" says:
Regional and inner city problems have often been caused by inflexibility in responding to the decline of traditional industries, the low rate of creation of new firms and inadequate levels of innovation.
Paragraph 7.11 says:
Regional policy remains based on the existing regional map. The Government have concluded that it is too soon to re-open the definition of the boundaries of the Assisted Areas which were last fixed at the end of 1984. The present intention is that the existing map should remain in place for the lifetime of this Parliament.
Areas with coal mining communities, like my own, have been virtually wiped out since 1984, and are suffering severe economic and unemployment problems.
Before 1981, the Castleford travel-to-work area enjoyed assisted area status. I tabled a question to the Chancellor of the Duchy of Lancaster asking
if he will list the total value of regional assistance given to companies in the Castleford travel-to-work-area for each year since 1979."—[Official Report, 9 January 1988; Vol. 125, c. 672.]
I received a reply showing that in 1979, the area received £275,000. The following year, 1980, that grant increased to £1,173,000. Since that time — bearing in mind the period of the miners' strike in 1984 — assistance has continued to decline. In 1987, the area received not one penny of assistance in any form.
In that period, the area also lost its two staple industries of coal and glass. All hon. Members are aware that the coal industry was run down rapidly, without any effort to help and without any planning to put alternative employment in its place. In that period, my constituency —not throughout the whole of the Castleford travel-to-work-area—lost five pits. That meant, with the spin-off jobs, that something like 10,000 jobs were lost over a short period. We have made persistent representations through correspondence, visits to Ministers and visits by Ministers, in an attempt to persuade them to rezone the Castleford travel-to-work area and make it an assisted area. The Regional Development Grants (Termination) Bill makes it clear that the Government have no intention of doing that.
Concern has been expressed by the hon. Members for Pudsey and for Corby (Mr. Powell) who, in giving examples from their constituencies, have pointed out that constituencies with a low unemployment rate continue, under the Bill, to enjoy assisted area status and the grants that go with it. I hope and expect that the Minister will tonight be able to explain whether there is some assistance within the Bill from which areas like mine could benefit. If not, why not? I hope that he will be able to tell areas like mine why the Government feel that no assistance is required. I hope that he will be able to tell us that they will get special assistance, but I cannot find any in the Bill. I certainly cannot find any in the Bill. At present, unemployment in my constituency costs £5 million a year. Would not that sum be better spent on designating

Pontefract and Castleford an assisted area, to facilitate investment in the area and create jobs? Without that, we are a doomed area.
The right hon. and learned Member for Richmond, Yorks (Mr. Brittan) referred to one of his local papers —the Cleveland Express, I think it was.

Mr. Devlin: I think that it was that famous Left-wing magazine, the Middlesbrough Evening Gazette.

Mr. Lofthouse: Whatever it was, it pointed to the success of the area and referred to a bright future. My own local paper, the Pontefract and Castleford Express, which is certainly not political, repeatedly points to the problems of the area. Only a fortnight ago it carried a major front-page story drawing attention to the great problems. It is not only that the area lacks jobs. It has become completely rundown, partly because of the Coal Board's callous decision to sell off all its houses in the area, thus creating problems for men who have worked in the coal mining industry all their lives and for their families. The paper published photographs which I have sent to different Departments. I hope that they will influence someone.
When the Select Committee on Energy conducted its investigation of the coal industry in 1986–87, Ian MacGregor, the then chairman of the Coal Board, and the Secretary of State for Wales, who was then the Secretary of State for Energy, informed that Committee that the problems of coal-mining communities savaged by the rapid rundown of the pits were the responsibility not of the Department of Energy, but of the Departments of Employment and of Trade and Industry, which had a responsibility to provide alternative employment. The Select Committee accepted that.
Whatever the inadequacies of the Bill, I hope that it will make special assistance available to areas that need it. I only hope that the Government will be able to dispel the suspicions of those in the mining community who feel that this Government have had it in for the miners and want to continue to crush them. They fear that because the Government have nothing to gain by offering assistance to areas where the mining communities are loyal to Labour and return Labour Members of Parliament, they will let them stop there and rot. I hope that the Government will dispel those fears.

Mr. Tim Devlin: Let me begin by stating the general view held by Conservative Members: we cannot and should not force companies and enterprise to move to locations where they do not want to be. The north-east region, from which I come, has to get up on its own two feet and create its own economic infrastructure, which cannot be grafted on by national Government. We have only to look back at the notable failure of the car plant at Linwood and the aluminium smelter at Invergordon to see that an unnatural market position will collapse if the subsidies are not there to support it.
In most cases, large-scale industry in the region is more widely based internationally and makes investment decisions according to other criteria. Undoubtedly, ICI would have made the investment that it has made over the past few years regardless of regional development grant. As hon. Members have told the House before, capital investment has cost jobs. In answer to my hon. Friend the Member for Pudsey (Mr. Shaw) who is no longer here the


mobile investment to which he referred could easily be covered by regional selective assistance. Indeed, I am sure that it will be.
Regional aid should seek to encourage ventures to go ahead that would not otherwise do so. It should fill the gap in cases where the risk is just too wide for banks to make loans but narrow enough to represent a prudent investment. We should look to smaller and medium-sized businesses to increase their output and market.
For far too long, the north-east has relied on the industrial giants to provide employment. Since the 1930s, Socialist persuasion has turned many eyes in the region towards the Government, to create employment. It cannot be stressed too often in the north-east that it is individuals and companies who create jobs. The Government are not the universal provider, and nor should they be.
Enterprise always played a key role in north-eastern culture before the Jarrow March. Middlesbrough was built to accommodate the new industrial classes of the late 19th century, using what was then the very latest technology. Dorman Long, now British Steel, Ashmore, now Davey McKee and Cleveland Bridge—all successful companies —were founded and built up by enterprising individuals who banded together without any regional aid. Some, like Pickerings Lifts in Stockton, are family firms, handed down from enterprising father to entrepreneurial son.
Such enterprise remains and this initiative will bring it back to the surface. Not long ago, I visited St. Peter's enterprise centre in my constituency. The centre runs a youth training scheme, and the occasion of my visit was its open day. Some of the 17-year-olds told me that they would like to open a shop or a small business dealing in aquarium accessories. Another started in printed T-shirts and is now in the rag trade. Ten years ago on Teesside, people of that age were expected to go into ICI, British Steel or British Shipbuilders. Their parents would have discouraged such enterprise in favour of a solid, dependable apprenticeship in a declining industry. There are now 10,000 self-employed people on Teesside and 6,000 new businesses are set up each year in the north-east.
My right hon. Friend the Prime Minister is quite right in saying that talent, initiative and ability are present in the region. This debate is about a measure designed to foster that talent, initiative and ability, and I believe that the targeting proposal will achieve that.
The enterprise in the north-east is proving an attractive feature to outside and inward investors alike. My hon. Friend the Member for Pudsey talked of the need to attract people to the region from outside. He called them the big mobiles. He needs to consider not just regional aid but a range of relevant aspects, such as the skilled work force, the commendability of the location and recommendations from other companies, as well as arrangements for grant.
Nissan is extremely happy with its north-eastern work force. It is now building better Bluebirds in the north-east than in Japan and recently announced an expansion that will bring 1,400 new jobs to the north-east. Mitsumi has confirmed that it is to set up a new electronics manufacturing operation in south Tyneside, expected to employ 400 staff by its third year.

Mr. Elliot Morley: Will the hon. Gentleman give way?

Mr. Devlin: No, I am not giving way.
Tallent Engineering at Darlington has set rolling a new assembly line, installed especially to make parts for Nissan cars. Elta Plastics in my constituency is now making parts, not only for Nissan, but for Ford and Hitachi. All those developments are the result of recommendations made by word of mouth. NEI Power Projects of Gateshead has won a £2 million project to supply lighting and electrical equipment to the port of Rangoon in Burma.

Mr. Frank Cook: Will the hon. Gentleman give way?

Mr. Devlin: Davy McKee has letters of intent to build two steel-making plants in South Korea. Following on from what my hon. Friend the Member for Beverley (Mr. Cran) said, Davy McKee is one of the more interesting firms as it carries out a great deal of research and development in the north-east.

Mr. Cook: rose—

Mr. Devlin: Tetleys at Eaglescliffe is now the largest teabag manufacturer in the world. AL-KO of Consett, County Durham—

Mr. Cook: rose—

Mr. Devlin: I know that Opposition Members do not want to hear about the north-east's successes because they are too used to giving out doom and gloom, but I shall tell them of some of the—

Mr. Cook: rose—

Mr. Devlin: No. The hon. Gentleman can make his own speech.
AL-KO of Consett, County Durham, has launched a comprehensive range of power washers for domestic and industrial use. Silleck Mouldings in Stockton is currently carrying out a £1–3 million expansion programme to recruit extra staff in the next six months to make plastic computer parts.

Mr. Cook: Will the hon. Gentleman give way?

Mr. Devlin: I have already said that I am not giving way.
Armour Plastics of Sunderland is to invest £700,000 over the next three years. The work force is to increase by 30 to 80. It makes a range of baths and sanitary fittings.

Mr. Cook: On a point of order, Madam Deputy Speaker. Is it not a convention in this Chamber that when an hon. Member refers to the constituency of another hon. Member and there is a point at issue, that hon. Member would normally, under reasonable circumstances, give way?

Mr. Devlin: rose—

Madam Deputy Speaker: Order. Let me answer this point of order. Hon. Members must decide for themselves whether it is appropriate to give way. I understand the point that is being made, but I can see the clock and I quite understand the position at this time.

Mr. Devlin: Well, Madam Deputy Speaker, Silleck Mouldings, the last company that I mentioned, happens to be in my constituency. The hon. Member for Stockton, North (Mr. Cook) should have intervened five minutes ago when I mentioned his.

Mr. Cook: On a point of order, Madam Deputy Speaker. For the sake of the record, I tried consistently to intervene but this hon. Member consistently refused to allow me.

Madam Deputy Speaker: Order. That is hardly a point of order for me. However, I try to keep a close eye on the clock.

Mr. Devlin: If I may continue. There are small companies in starter units, for example, a small company in my constituency makes speedboats. It now wants to expand and to build luxury yachts for use in the West Indies—

Mr. Cook: On the issue of speedboats, will the hon. Gentleman give way?

Mr. Devlin: No, I shall not.
A small company—also in my constituency—called Videoscan makes short-range video transmitters—

Mr. Cook: On the issue of video transmitters, will the hon. Gentleman give way?

Mr. Devlin: No.
—so that cabling does not need to be used to project programmes in house. Another small company—also in my constituency — turns over £3 million per year, making lipsticks holders.
Things are improving rapidly. It has been a record year for North-East Investors, the regional capital fund. Profits are up by 34 per cent. In the past three months, 63 per cent. of companies in Teesside chamber of commerce have increased their sales and 34 per cent.—

Mr. Cook: On the issue of the Teesside chamber of commerce, will the hon. Gentleman give way?

Mr. Devlin: No.
—and 34 per cent. have revised their investment plans for plant and equipment upward. It is interesting to note—I know than many hon. Members are anxious to hear good statistics from the north-east — that 79 per cent. believe that turnover will increase and 76 per cent. believe that profitability will increase. Compared with 12 months ago, more report that they have increased sales, more report that they are upgrading their plans for investment and considerably more anticipate increased sales and profitability. Compared with three months ago, export sales have shown a great improvement and the work force is increasing.

Miss Mowlam: Will the hon. Gentleman give way?

Mr. Devlin: No. I shall come to the hon. Lady's constituency in due course.
There are several exciting ventures, including seven flagship projects in the Teesside development corporation—£160 million is being spent on them. It was good to hear my right hon. and learned Friend the Member for Richmond, Yorks reading a positive image of our area from the Middlesbrough Evening Gazette. I pay tribute to my hon. Friend the Member for Corby, who stressed the need for a positive self-image and the need to convince other people of the greatness of one's product.
I should add that we must convince ourselves in the north-east of the enterprise culture that is already there. We must see all of Teesside working together. We must learn from Corby, and I hope that before long Teesside will suffer from Corby's difficulty in looking forward to a situation in which we have too many jobs—

Mr. William Powell: Will my hon. Friend give way?

Mr. Devlin: No, in fairness to the whole House I do not think that I should give way.
Smiths Dock is to become an offshore supply base. Bowesfield lane is being turned into a high-tech office development. We have an extremely exciting project at Belasis Hall technology park—

Mr. Cook: On the issue of Belasis Hall technology park, will the hon. Gentleman give way?

Mr. Devlin: No, I shall not.
English Estates North is putting up 50,000 sq ft of office and small manufacturing space and there have already been 20 serious inquiries—[Interruption.]

Madam Deputy Speaker: Order.

Mr. Devlin: I know that Opposition Members do not want to hear of these successes, but they will have to hear me out.
Cleveland business centre is setting up 56,000 sq ft of small offices and flexible workplaces. In the introduction by my right hon. and learned Friend the Chancellor of the Duchy of Lancaster, we heard of the extra resourcing that will be put into English Estates North. It is already refurbishing 75,000 sq ft of Teesside industrial estate in Thornaby in my constituency.
At present in Middlesbrough only about 41,000 sq ft of prime modern accommodation is available, with only 26,000 sq ft of secondary accommodation and 18,000 sq ft of tertiary accommodation. That total of 85,000 sq ft compares favourably with the position only two years ago, when there was 200,000 sq ft on the market. That accommodation has been taken up by companies as diverse as Albany Life, which has recently announced its move to Teesside, and Legal and General Insurance which is also coming to Teesside.
Demand now primarily exists for between 2,000 and 2,500 sq ft but unfortunately accommodation varies in availability from 5,000 to 15,000 sq ft and 1,500 sq ft at the small end. Therefore, when the Minister replies, I hope that he will stress the role of English Estates and I draw to his attention this need, which English Estates should meet in the years to come.
Prime shopping locations are being snapped up in Middlesbrough and throughout the north-east. Sainsburys, Laura Ashley and The Body Shop are all moving to Middlesbrough. A professional magazine recently quoted a local estate agent as saying:
Things are beginning to improve. Now is the time to be buying in Cleveland".
There is much to be welcomed in the White Paper, of which the abolition of automatic regional development grants forms part. The objectives of regional policy remain the same as they were in 1983—to reduce the imbalance in employment opportunities on a stable long-term basis and to help develop indigenous potential, leading to self-generating growth. The latter objective must continue to be our central objective.
When I heard earlier in the debate the call for greater co-operation between the Departments of Trade and Industry, of Employment and of the Environment, I thought immediately of the three wise men presiding over the north-east and the closeness of their co-operation. I must commend that to the Minister and hope that it will continue.
I take this opportunity to welcome the setting up of a Middlesbrough office of the DTI. It is absolutely vital to our initiatives in the north-east that we have a one-stop shop, which should be more accessible to the people of Teesside. In addition to the excellent brochure that the Department of enterprise has now produced, we must have a good quality brochure giving a list of all the assistance that is available to companies throughout the region. The brochure that has already been issued is excellent. I have tested it by ringing the numbers and making inquiries, and I am pleased to say that the response was exceptionally good.
English Estates must be encouraged, but I ask my hon. Friend the Minister to consider looking at some of the rents it is charging. The enterprise initiative is particularly welcome in the north-east. It will give higher grants to smaller and medium-size companies, which are the very ones we are short of. It will also give them specific help with design, marketing, quality control, manufacturing strategy, business plans and financial and information systems. That range of help will probably be much more valuable than large dollops of money.
Assistance is already being provided in some areas by, for instance, the Teesside polytechnic new products unit, the Newcastle fashion centre, based on Newcastle polytechnic, and the initiative called higher education support for industry in the North. There are also initiatives by the Northern development corporation and the new urban development corporations.

Mr. Don Dixon: Come on. We have had 15 minutes of this drivel.

Mr. Devlin: I am just setting out the vast range of help available to companies in the north-east, all of which is helpful.
There are organisations such as Aycliffe ITEC, providing hardware and software support, which need to be pushed more centrally. They all need to be drawn together in another booklet, and I ask my hon. Friend the Minister to consider that.
The Department is now to offer special assistance, some through independent consultants, some through existing agencies. It needs to be tied together.
I am very pleased with the response that I received when dealing with the regional office of the Department of Trade and Industry.
Our objective in the Bill is to strengthen and modernise regional policy. I welcome the Government's commitment to the north and the other regions, but I look for a more effective way to encourage a new and lasting economy. The economy of the north-east of England is changing. We can no longer prop up yesterday's industries, and the changes need to be sustained by helping small companies which are building the sunrise jobs of tomorrow with development. There is a particular need for investment in small companies with fewer than 25 employees. I very much welcome the investment grant of two thirds for product and process development by those small companies.
It is also extremely important for us to continue to build greater bridges between school and industry, between higher education laboratories and commerce. The recession in 1979–81 hit my region hard. Shipbuilding has gone; 54,000 jobs in steel have been lost. Yet we may see

the beginning of a turnaround. Yacht-building may come back to the Tees if shipbuilding does not. Investment is rising. Unemployment has fallen every month for the past 18 months, providing one job for the man who has to revise the figures in Stockton town hall each month.
There has been a 19 per cent. drop in long-term unemployment, and we see in the north of England pay survey recently carried out by Hay Management Consultants that although pay is less in absolute terms in the north than in the south, purchasing power in the north is much greater.
Our policy must not be to seek to distort markets in ways similar to the optimistic move of Rootes to Linwood or that aluminium smelter at Invergordon. I agree wholeheartedly with my hon. Friend the Member for Beverley that our paramount consideration is to build on strength which already exists in the north-east of England. As I have shown, those strengths are there. We must build on them.

Dr. Dafydd Elis Thomas: The hon. Member for Stockton, South (Mr. Devlin) listed a large number of companies. I was not familiar with the names of all of them, but I know that one that he mentioned — Laura Ashley — has received substantial amounts of public expenditure and employs a large number of people in the area in which I live in mid-Wales. Without a regional aid package, that company would have relocated in Holland.
The hon. Gentleman also gave us a caricature of the relationship between regional policy, regional aids and the role of the market, as did other Conservative Members. They must realise that the regional policy was brought about because of the effects of market distortion on existing communities. What we are now seeing from the Government is the withdrawal of even that limited role of intervention in the effect of the market upon communities and work forces.
That dimension is lost on many Conservative Members. I regret that we have a simplistic analysis of the relationship between the economy and society, although it does not surprise me, in view of the attitudes of some Conservative Members and the Government.
The regional policy debate tends to concentrate all the time on what are perceived to be problem regions—that is, us—rather than on the major problem of the United Kingdom, which is, of course, the south-east of England. We have had in this debate — at least from the hon. Member for Gordon (Mr. Bruce) and others—the clear statement that the south-east of England is itself not only a region but very much a problem region. The hon. Member for Sedgefield (Mr. Blair), who opened for the Opposition, stressed that very clearly.
What we need to do when we are talking about regional policy and regional development programmes, such as the one we are considering, is to see them in the context of the real regional policies. It is about time the real regional policy stood up in this Parliament. That means that we should look at the hidden state subsidies—not all that hidden, if we look at the public expenditure White Papers—which go directly to those companies and industries located in the south-east and the south-west of England. The Government's overall macro-economic policy hit the regions that are traditionally most dependent on manufacturing worse than others.
In particular, the cuts in regional spending of over 50 per cent. have obviously most directly affected the areas that were most dependent on that spending —the northern regions of England and the nations of Scotland and Wales, which, for the purpose of this debate, I shall call regions—that is, EEC regions; I am not denying them national status within Britain.
Real regional policy means expenditure on defence, new technology and the procurement budget of the Ministry of Defence, which increased by 40 per cent. in real terms between 1979 and 1987, a period in which there were massive cuts in official regional policy spending. It is now up to £8·2 billion. The main beneficiaries are the aerospace and electronic industries. It is no surprise to us to see them located in the south-west and south-east of England. It is those areas that are benefiting from that aspect of regional policy.
Let us lo006Fk at the extent of Government research and development on defence. Eighty per cent. of all Government expenditure in the electronics industry is accounted for by the Ministry of Defence. That, too, distorts the area in which the spending is carried out and the form of spending. Looking at the overall levels of civilian research and development, we see quite clearly that Britain devotes more of its Government-funded research and development resources to military expenditure than any other major power except the United States.
Fifty-three per cent. of all Government research and development expenditure generally — not just on electronics is absorbed by defence. The result is that public sector spending on research and development, which is a form of indirect regional policy, benefits certain regions and disbenefits others. On an overall picture, the position in the south-east and south-west of England is progressive and positive but elsewhere similar expenditure is not available from public funds.
I do not argue for the diversion of all military expenditure to Wales and Scotland, although we suffer a lot from military expenditure in the form of low-flying training. I ask for recognition of the fact that the state's decisions on research and development, areospace and defence are part of regional policy and should be quantified as such. When we debate regional policy we should debate the regional impact of all public expenditure, not just a limited programme of grants, as we are doing at the moment.

Mr. Malcolm Bruce: Will the hon. Gentleman acknowledge that in many cases the receipts to the Exchequer from corporations and companies that invest throughout the United Kingdom are credited as though they are earnings in the south-east, when in fact they are earnings from investments in the regions, for which the regions get no credit? The Government should take account of that fact when quantifying the whole package.

Dr. Thomas: The hon. Gentleman is right. Many sectoral patterns of expenditure which are Great Britain-wide are not regionalised in an assessment of public expenditure. At the beginning of this decade, 80 United Kingdom plant locations received Ministry of Defence contracts of more than £50 million. Half of them were in the home counties. Ten of them, including Rolls-Royce and the celebrated Westland, received contracts of more than £100 million and were in the west country. Only nine

were in Scotland and there was none in Wales. That shows the way in which that part of public expenditure distorts regional policy.
In looking at regional policy we need to take account of all the spatial consequences of other Government policies. We need a level of regional intervention that is enough to counteract the pull of other spending programmes concentrated in certain locations. This is where the approach to regional policy, which has been depending on the forms of grant aid, is inadequate. I share the Labour party's previous view—not its present one— that the allocation of regional development grant to major multinational companies can be argued to be a waste of public expenditure.
Ministers have not told us how they intend to ensure that the selective package will make up in levels of expenditure what is currently made available. We have not yet had that commitment from the new Secretary of State for Wales or from any Scottish Office Minister. We want such a commitment from the Government if they are seriously saying that they will produce the same level of support, directly or indirectly, through their expenditure programme.
I am not taking part in the filibuster on the Government Benches which has occurred because the Government cannot find enough Conservative Members to speak. I stress that the Bill will not be welcomed by the agencies involved in industrial development in Wales. We welcome the additional funding made available to the Welsh Development Agency, but we can debate that on Thursday evening on the Welsh Development Agency Bill, when I hope to catch your eye again, Madam Deputy Speaker, which is why I am being brief now. I stress that there are other regions in Wales, especially mid-Wales, which have been badly affected by the loss of development area and assisted and intermediate area status from this Government and by the potential loss of status in the European Community. Mid-Wales Development has received a slightly smaller increase in budget than the WDA.
Mid-Wales is the poorest area in Wales. Pay levels are the lowest in Britain. The population density is one sixth the European Community average. One job in four is dependent on agriculture. It is the most remove rural area in England and Wales that I know of, because I have to get up there. The Development Board for Rural Wales, with its small budget, had been doing the particularly important work of social and economic investment in the area.
We want assurances that the Government's regional policy will not contain anything that will affect the operation of the Development Board for Rural Wales or the Highlands and Islands Development Board in Scotland. We want an assurance that the Government, when looking at the SDA and WDA, will look in parallel at those other development agencies which are the real engines of participation between the state and the commercial sector and which are really involved in regional development.

Mr. Kenneth Hind: I am a strong believer in regional development policy and represent a development area in the north-west of England. This is a bit like déjà vu. In March 1984, I sat through a debate on the Co-operative Development Agency and Industrial Development Bill, now an Act, which this Bill amends. The Opposition made the same complaints then about the


new system of grants that they have made tonight.
At that time, unemployment was half a million higher than today and the basic rate of income tax was 30p in the pound, compared with today's 27p in the pound. This shows that that legislation worked. After four years, we have a time to review and adjust to the changing circumstances in the economy. In the north and other parts of the country that are regionally aided, we cannot escape the fact that a strong economy is needed for employment to be reduced, and for the regions to prosper.
When I took over a new constituency in 1983, I was appalled at the level of ignorance about what went on in the local factories among Labour representatives on the local council, and at some of the statements made by Labour politicians in the locality about local industry. The truth is that they knew nothing about what was going on in local industry. I am afraid that, listening to tonight's comments, I find myself in the same position.
However, I wholeheartedly endorse the comments of my hon. Friend the Member for Stockton, South (Mr. Devlin), who made a point of putting on record the strength of the local economy and its improvements over the past few years. I took over a constituency in which there was no employers' organisation. I formed one. With the assistance of the Bishop of Liverpool and the aid of all the local parties, I set up a task force to attack the problems of the area. Now we have a full-time director, who was appointed this week.
The message is clear: we must use self-help to tackle the problems in our areas. It is no use crying salt tears and saying that the state will provide, and that we are not prepared to take action to help ourselves. In Skelmersdale —oh, yes, the place that everyone loves to hate—in the past two years, we have created 1,500 new jobs, and 78 new firms have come in during the past two and a half years. In the past three weeks, over 300 new jobs have been announced in three new factories that are coming to the area.
That progress has not been due only to grants. It has also been brought about by attempts by the local council, the Commission for the New Towns and the task force to go out and promote the town. I must say with pride that Skelmersdale, like Chorley, is becoming a success story, and is a booming area in the north of England. I am now in the embarrassing position of telling the House that, in the next three months, we shall not have an empty factory in Skelmersdale. We shall have to start building them. That is a measure of our success.

Mr. William Powell: Will my hon. Friend confirm that Skelmersdale took the sensible step of hiring the former director of industry from Corby to take over? Middlesbrough did the same for its urban development corporation.

Mr. Hind: My hon. Friend is correct. Skelmersdale employed the economic director from Corby to take on the direction of the town's development.
I have found that the major problem with small firms is that they are not necessarily creating jobs, but they need to buy new machines to keep them up. The limit on grants for 25-employee firms — up to £15,000 for new machinery, or £25,000 for innovation — is very successful, and will meet many of the problems that will be created by the removal of regional development grant.
Regardless of how my right hon. and learned Friend puts the case, regional selective assistance is a process of backing winners. We are trying to create enterprises that will sustain themselves and go on beyond the grant, rather than simply throwing money at projects that will fail. The Bill, and the White Paper that goes with it, by providing the expertise of consultants to provide guidance, will equip those companies far better to take advantage of regional development grants.
Let me tell Opposition Members that where firms fail is in expertise: design expertise, marketing expertise and the basics of business planning. The business development initiative system will provide those advantages and help firms to take advantage of what is available.
Finally, despite all the crowing, the truth is that during the next three years, £900 million will be available for the regions and for towns such as Skelmersdale. There will be no diminution of the amount of money available: far from it—there will be an increase. It is up to industry to use and take advantage of the system that is available. If it does that, there will be no need for any fall in the amount of money it receives or for any fall in prosperity in areas that take advantage of the new system.
I commend my right hon. and learned Friend's proposals. He has hit the right turn in the tide, and places such as Skelmersdale will take advantage of it.

Mr. Rhodri Morgan: I listened with great care to the speech of the hon. Member for Stockton, South (Mr. Devlin). He demonstrated that, whatever political deficiencies he may suffer from, dyslexia certainly is not one of them. His ability to extract dramatic interest from a rendering of the Middlesbrough area yellow pages telephone directory brought new heights to a discussion of regional policy. Like Conservative Members, I hope that the Minister in winding up will be sympathetic to their appeal for hospitals to be ready to cope with the injuries that will be caused among the rush of industrialists moving to the north, the west, Wales and Scotland, as a result of the initiatives that the Government have announced tonight.
I shall say three things about regional policy, on which I worked for 20 years before entering the House. First, how much do the Goernment know about what they are spending on regional policies and where they are spending it? Second, I should like to say something about the taxation treatment of regional development grants and regional selective assistance. The Government have omitted that from their White Paper. Finally, there is the question of fraud and abuse of regional aid.
Do the Government know what they are spending, and where they are spending it? Let us briefly look at the figures that they gave in their public expenditure White Paper and compare them with the figures for the same year, the same region and the same programme as they gave in last year's public expenditure White Paper. Under the heading, "regional and general industrial support," the DTI gave the figure of £888 million for 1982–83. One year later, it says that, in the same period, it spent £503 million. That is a little matter of £385 million that seems to have gone missing.
The following year the DTI had the same problem. Last year's White Paper gave a figure of £617 million, but this year's White Paper gives a figure of £426 million. In the past three years, the problem was slightly less. This year's


White Paper gives a figure for the coming financial year of £463 million and last year's White Paper gave a figure of £300 million.
There are similar enormous discrepancies in the figures for Scotland and Wales. This year, the Government say that they spent £439 million five years ago on regional development in Scotland. Last year, they gave the figure for the same year as £158 million. Has £300 million-worth of regional expenditure jumped across the border in one year? Are they now saying that five years ago the money was spent not in England but in Scotland?
One has to doubt White Papers as an indication of what the Government are spending, on what they are spending it, and where they are spending it. They should assist those who work in industrial development and be completely frank when discussing their regional policies. They should not hide the mess that they made in last year's White Paper; they should tell us about it in the House, quite frankly, so that we can have a sensible, mature discussion of the real priorities for regional policies. It is no good trying to hide the confusion by obfuscation and mixing up regional selective assistance and regional development grants so that we do not know where we are going because the Government do not know where they are going.
The figures show that the Government do not know how much money they are spending, in which regions and on what programmes they are spending it. That is a major problem. If we are to have a higher level of debate, they should give us the figures that are not given in the public expenditure White Paper or this month's enterprise White Paper.
How much are the Government spending on regional development grant next year? How much has already been committed of the money that the Government expect to spend over the next two, three, four or five years in regional development grant contracts that have already been signed? How much have the Government committed themselves to spend on regional selective assistance and how much money is still available for industrialists who have yet to come along and see the Government? That is the figure we want to know.
As we all know, RDG is paid after one has spent the money. The Government are committed to paying the money by the fact that the guidelines have been met. There may be people today who are spending regional development grant for five years from now. Therefore, what is the uncommitted money still left in the regional development budget, and will that money be cash-limited?
Regional development grant had the virtue of not being cash-limited. If there was an upturn in industrial investment in the regions, the Government met the bill because there was more incentive and more investment. Industrialists were confident in the fact that they could, as it were, break the bank if there was an investment boom.
The Minister said that he was worried about the fact that, with an industrial take-off, the regions no longer needed industrial development grants. However, we know that industrial investment is only now returning to the 1979 levels. Therefore, why is there a fear of having to pay incentives to encourage some of that greater flow of investment to go to the regions? The higher the level of investment, the greater the mobility of that investment because it will be hitting the sticking points and obstacles to investment in the south-east. In 1988–89 there may

finally be a shift between the regions; from the south-east to the outlying regions, which are more dependent on manufacturing jobs.
There are some faults in the Government's White Paper, which lead to cynicism when industralists look at it to see what guidance it can give them. The same faults affect practitioners who work in regional industrial development, as I did for 20 years before coming to the House. They are looking for some idea of what it really means to the industrialist to have regional selective assistance on offer. We have had no clarification from the Minister on that. All we know is that the Government have tried to pretend that the same amount of money, or more money, will be available, without allowing for inflation in the cost of investment goods. That may be running quite high at the moment, because there is rampant inflation in the building industry, as we all know. That is one of the pinch points for industry. There is a shortage of bricklayers, carpenters, plasterers and so on.
If people are trying to discover how much money the Government intend to make available, they will want to know whether it will be taxed or untaxed. The same money spent on RDG and then switched to RSA actually means 35 per cent. less money because corporation tax will have to be paid on RSA. If, as in Wales, the Government intend to spend £100 million on RDG and switch that to RSA, one would need to be spending £150 million on RSA in order to give industry the same benefits. The Minister has made no reference to the difference in the tax treatment of RDG and RSA. That is the tactic of a cardsharp. In fact, it is a cardsharp's White Paper. It is impossible to work out how much money is left and how much money the Government are committed to spending as distinct from making an allocation that they do not worry about. RDG commitments can run on for five years, and that reduces the amount left. We want to know whether what is left will be cash-limited.
Fraud is a serious issue in regional development, and always has been. If the Government want to say to the House—I do not see why they should not—that RDG2 is difficult to administer and has been prone to fraud and to non-viable companies exploiting it and not producing the jobs, why do they not just say so? That scheme was devised by the right hon. Member for Chingford (Mr. Tebbit) who was Secretary of State for Trade and Industry at the time of the changes in November 1984. The Government should just say, "Our problem is that we cannot monitor the RDG2 scheme. It is difficult for us to handle, and we intend to scrap it altogether." If they said that, we could have a sensible discussion about whether we should change RDG2 in order to get rid of the fraudsters and those who take the money and run, instead of now having to scrap the scheme altogether.
There is another alternative on which I wish to press the Minister. Will he please investigate the possibility of making regional selective assistance tax-free? One attraction of regional development grant was that it was tax-free. Firms which receive regional selective assistance often use it to prettify their balance sheets. After all, a revenue support item that is taxable makes the industrialist look very clever when he presents his balance sheet He seems to have made more profit out of no expenditure. But they could not do that with regional development grant because it was a capital support scheme.
I make three pleas to the Government: first, for a much better quality of public expenditure White Paper next year;


secondly, for complete frankness with the House when discussing how much money remains available to industrialists in the regions who want to develop; and, finally, a greater appreciation of the importance of regional aid in giving the regions the confidence that they have a future under this Government.

Mr. Alan Williams: This is one of a series of debates on regional policy, and I am still puzzled why the Conservative Government hate the regions. It is not as though they do not say the right things. They just seem to do things that undermine their protestations. In 1970, the first act of the Conservative Administration—it was lain Macleod's one and only Budget—was to get rid of investment grants. That was a major blow which, within two years, cut the amount of new industry going to the regions by 50 per cent. So devastating was it that, two years later, the Government introduced the Industry Act 1972 which introduced regional development grants. My right hon. Friend the Member for Glasgow, Govan (Mr. Millan) and I served on the Committee which discussed that Bill. It introduced regional development grants, which the Government intend to abolish with this Bill, because of the failure of the previous attempt to abolish capital investment grants.
Let us consider the cumulative effect. It is not as though this is a one-off attempt. There has been a series of attacks on regional policy, including the abolition of the industrial development certificate — I do not suppose that was much mourned—cuts in the boundaries of assisted areas and the abolition of special development areas, which had a great impact on the old industrial, coal mining and steel areas. Most important has been the sustained and varied attack on capital incentives, which is especially important when one remembers how critical manufacturing investment is to effective regional policy.
The Government have calculatedly destroyed incentives to investment. First, they cut regional development grants from 22 per cent. to 15 per cent. and now they wish to abolish them. Despite their claims of wishing to modernise the regions and make them efficient, they have abolished the regional development grants that were available for new machinery and equipment for existing plants.
The Government have destroyed capital allowances. In the 1970s, with capital allowances, regional development grant and regional selective assistance, Britain had the best package of incentives for investment of any European country. But since the Government came to power in 1979, we have lost £11,000 million-worth of manufacturing investment. That is how much lower investment has been under what the Chancellor of the Duchy of Lancaster called the enterprise economy with which his Department wishes to be associated.
As my hon. Friend the Member for Cardiff, West (Mr. Morgan) said, manufacturing investment, which is at the heart of job creation, has not only been bled by £11,000 million but is still, after the so-called growth about which the Minister boasted, 10 per cent. below the level that the Government inherited. Because of that, we have invested less in the regions, and, because we have invested less in our industries, they are less competitive than our

international overseas competitors — the OECD countries. We have been losing ground in terms of balance of trade in world markets.
I hope to show that, as a result of the Government's decisions, there has been a £2·5 billion deflation in the assisted areas. It is not even as if the Government's policies are any good for the south. They may not be good for the north, but they are no good for the south either. One of the great illusions is that there is a clash of interests between the south and the north. However, the south has as much interest as the rest of the country in seeing the full deployment of the resources available in the regions, not just because they bring extra productive capacity on stream but because the resources stop the congestion problems that all hon. Members understand take place in the south of England.
During the Minister's statement, the hon. Member for Cambridgeshire, South-West (Sir A. Grant) asked whether the Minister could
confirm that the effect of his new regional policy will be to stem the migration of people from the assisted areas into high growth areas such as Cambridgeshire, where the pressures have become intolerable?" —[Official Report, 12 January 1988; Vol. 125, c. 161.]
A similar point was made by a Conservative Member who I think represents a constituency in Berkshire, on Third Reading of the Co-operative Development Agency and Industrial Development Act 1984. That hon. Gentleman stressed the pressures on the south as a result of the inevitable movement from the north.
Let us consider the scale of that movement. Cambridge Econometrics predicts that by the turn of the century, the northern region will have lost 1 million people through outward migration. That represents 7 per cent. of its working population. Where will they go? Who will accommodate them? We should not think that that is just a problem for the future. In the past five years the north has lost 187,000 people. Scotland has seen an outflow of 190,000 and Wales an outflow of 169,000. In three years the gross outflow of population from those three regions was 550,000. Where have those people gone? Where are the pressures building up?
That outflow has occurred before this Bill is enacted and before a further weakening in the Government's regional policies. There is a problem for the regions implicit in the Bill. However, there is also an implicit problem for the south and the areas of affluence and prosperity.
I want to consider some of the Minister's arguments. We have heard the value-for-money argument. The right hon. and learned Member for Richmond, Yorks (Mr. Brittan) administered the grant system for somewhat longer than the present Minister. Indeed, my right hon. Friend the Member for Govan and I administered that system for some years. It is well known and incontrovertible that in efficiency terms the regional development grant is far cheaper to administer for the Government and for those firms in receipt of the grant. That is one reason why it is so popular with small firms and why 80 per cent. of the grants go to those small firms. The argument that the grant is not cost-effective is exploded by one of the few pieces of revelation in the White Paper.
The White Paper states that in 1985–86 regional selective assistance cost 46 per cent., or £378, more per job than regional development grant. In 1986–87, it cost £331


more per job than regional development grant. In 1986–87, it cost 28 per cent., or £432, more than regional development grant per job. The figures are even more astonishing if we consider Wales or Scotland.
Ministers claim to be hellbent in pursuit of administrative efficiency and value for money. In the Bill they are asking the House to give them the flexibility to give up the system of grants that provides jobs at £1,500 each, so that they can concentrate on their alternative, preferred system which costs £1,950 per job. These are the people who have the cheek to talk to the Health Service and local authorities about competitive tendering and value for money.

Mr. Kenneth Clarke: I have seen such figures reported and they have been misinterpreted. If we compare the jobs provided with RDG and RSA offered, which is the correct comparison, unlike the one made by the hon. Member for Dagenham (Mr. Gould) this morning, we see that the cost per job of RDG is £3,701 and the cost per job of regional selective assistance is £2,760. These are 1987–88 estimated outturn figures. There appears to have been a mistake in the Labour party's research department when comparing the amount spent for grant paid in a year with the jobs created by the offers made in that year.

Mr. Williams: I invite the Minister to sit down with his little calculator and go through the tables in the White Paper. He will find that my figures are correct.
The Government say that we must get rid of regional development grant because it has no relationship to jobs. They get the money even if they do not create jobs. I thought, "That is interesting. Let's see what they have in mind," so I asked the Minister
what checks will be made under his proposed new regional investment grant to ensure that firms achieve the promised number of jobs"?
On 19 January I received a fascinating reply from the Parliamentary Under-Secretary of State for Trade and Industry, the hon. Member for South Ribble (Mr. Atkins). I see the right hon. and learned Gentleman smiling. The Under-Secretary of State replied:
The creation of jobs will not be a condition of the new regional investment grant but the scheme is expected to have a beneficial effect on employment"—
here comes administrative prudence—
and we shall be setting up arrangements to evaluate this on a sampling basis."—[Official Report, 19 January 1988, Vol. 125, c. 673.]
The Minister today described his bold new policy as a straight path to new jobs, except in so far as the new incentive scheme is concerned. How does he reconcile that with value for money? Indeed, I wonder how long the Minister will enjoy the privilege of a ministerial car?
In all these discussions, the Government have overlooked the important point made by the right hon. and learned Member for Richmond, Yorks, particularly in respect of inward investment, about which Ministers protest. Predictability is a critical factor. I could not have put it more effectively than the former Secretary of State and Chief Secretary to the Treasury put it. Predictability is an important factor in determining whether the grant is even taken into account when finance directors and boards are considering their decisions. They must bear in mind that many inward investment projects are phased developments. They are not single projects. They come in

intending to build up in the European market and expand, but, before taking any decisions, they consider what sort of incentives they can look to in phases two and three.
The loss of regional development grant robs us of that predictability, but the number of changes in regional policy means that there is no predictability, even about the continued existence of the regional selective grant. Under this Government, nothing about regional policy is predictable.
The Government say that we need indigenous development. Of course we do—no one disputes that fact—but we must bear in mind the limits of indigenous production or development. In a way, it traps us within the limits of the skills of old industries. Therefore, we need cross-fertilisation of inward investment, be it from the south or overseas. We need it to bring in high value-added industries and high-technology industries with their demands for new skills.
The Minister does not appreciate that in the long term, diversity and the industrial mix are as important as the creation of jobs. That is why capital grants are so important. Unless we have diversity, we may have all the north in low-paid jobs and all the south in high-paid jobs, and still have a regional divide. Conservative Members do not seem to want to understand that point. Indeed, they protest that they are committed to regional selective assistance. As I pointed out in an intervention, that protestation—that hand-on-heart commitment to valuefor-money regional selective assistance—would perhaps be more credible if only I had not seen the depth of it during the past year.
The Government were giving regional selective assistance at the rate of £127 million less than the rate at which the Labour Government were giving it when they left office in 1979. In fact, in the intervening period, the regions have lost £685 million of the very incentive that the Government say they favour. They have actually cut by 37 per cent. the very incentive that they say is the most efficient. They say, "You must bear in mind that we are coming forward with a new set of proposals. We have a new investment grant scheme whereby jobs will not be the criteria."
Is it not absurd to try to convince us, and even more absurd to try to convince business men, that small firms are getting a good deal? They are told that, at present, they can get 15 per cent. of capital cost with an alternative of £3,000 a job and up to 200 jobs created. Under the Government's new, brilliant scheme, they will gel 15 per cent on up to 24 jobs, and a maximum of £ 15,000. So lucky small business men will lose grants of £3,000 a job. Of course, they will happily say, "What a good Government we have. They have given us grants of £600 a job instead." What is more, because they are good little Conservatives, they will say, "How happy are we. We shall also help the Chancellor. Not only will we take less, but that less will be taxable. We shall also put some of it back into the Chancellor's pocket."
We have heard hon. Members speak about whether there will be more or less spending. As my right hon. Friend the Member for Govan said, the figures in the White Paper are clearly intended to mislead, or at least to obscure, rather than to reveal. I noticed the dubiety that was expressed by the right hon. and learned Member for Richmond, Yorks, a former Chief Secretary to the Treasury, who referred to the Treasury's tricks of the


trade. He implied that he would not be taken in by the figures, even if the Minister thought that everyone should be. We shall examine the figures in future.
We have been over this ground before. The real reason has nothing to do with efficiency; it is all to do with cuts. In 1984, the present Chief Secretary stood at the Dispatch Box, looked us straight in the face — many hon. Members were present—and said, "Of course, this has nothing to do with cuts. Coincidentally, we shall spend £300 million less, but that has nothing to do with our motivation. It is just a coincidental consequence of what we are doing."
Last week, the Minister gave his reason for changing things. He said:
we are now changing the nature of the grant because of the change in economic circumstances. Most notably, a huge increase in investment is going ahead in the regions, and unemployment is now falling faster there than in the rest of the United Kingdom."—[Official Report, 12 January 1988; Vol. 1433, c.149.]
Is the Minister seriously suggesting that, in redressing 200 years of industrial revolution, a one-year blip on the regional life-support system means that the regions are now all fit and well? What he is saying is that the patient is breathing and that we should turn the electricity off and save a bit on the bill. The idea that one year's growth makes the slightest difference to the positions of Wales, of the north, of the north-west and of Scotland vis-à-vis the south is beyond credibility. What is more, it is an insult to the Minister himself that he has the cheek to put it forward, because we all know that he is too intelligent to believe it.
The Minister's policy is not just foolhardy or shortsighted; it is dangerous. As in our cities we have seen the divide of poverty and affluence generate the politics of envy, desperation and violence, so to allow a continual widening gap of hope and expectation between those who live in the north and those who live in the south is potentially explosive. We cannot, and the Government should not, allow the prolonged widening between degrees of affluence on either a geographical or a social basis. One cannot allow it to be perpetrated on a geographical basis without producing a political and constitutional backlash. I warn the Government that today's economic divide could become tomorrow's constitutional rift.

The Minister of State, Scottish Office (Mr. Ian Lang): The debate has roamed wide over the provisions of the Bill, and that is understandable and right because it is only one element of the new regional policy which, in its broader setting, is probably the most positive, most comprehensive, most imaginative and most relevant that we have had for quite some time.
But that would not be apparent to anyone listening to the speech that we have just heard from the right hon. Member for Swansea, West (Mr. Williams). One would never have thought from his speech that in the past 18 months in Wales unemployment had fallen faster than anywhere else in the United Kingdom, down by almost 26,000 in 1987 alone. One would never have thought that the Welsh Development Agency was now well on course to let a record amount of factory floor space in this financial year or that one sixth of all foreign investment in the United Kingdom had chosen Wales as its location,

and that Wales now employed more people in inward investment companies than it did in coal and steel. These are just some of the many encouraging facts about the present state of the Welsh economy that will come as something of a surprise to the right hon. Member for Swansea, West.
It has been a curious feature of this evening's debate that, despite the changes in the economic circumstances of the country, it has been conducted against a background of the refusal of Opposition Members to acknowledge by even the slightest word or expression that there has been the smallest change in the national economy in the past year or two. It is as if the past two years had never been and as if a fall in unemployment of 600,000 had never happened. Opposition Members are wrapped in some time warp by the imagery of their obsolete rhetoric.
Everything must be characterised as failure, decline or disaster, no matter what the reality is. Every change in Government policy, however sensible or whatever the background, is instantly characterised as, at best, vindictive and, at worst, mad; and the contrast is striking between the demons conjured up by Opposition Members and the examples of what is going on in the real world, of which evidence was given by my hon. Friends the Member for Stockton, South (Mr. Devlin) and the Member for Lancashire, West (Mr. Hind) or my hon. Friend the Member for Corby (Mr. Powell), where unemployment has fallen from 25 per cent. to 12 per cent.

Ms. Armstrong: The Ministry has in other forums used Consett in my constituency as an example of the massive success of its policy. Does the Minister realise that employment in Consett in the past three years has grown by 0·4 per cent. — less than half of 1 per cent.? Unemployment has fallen but so has the number of people living there; and the Government's figures have been fiddled so that unemployment looks as though it has fallen by about 4 per cent. This is the real position.

Mr. Lang: That is all the more reason for the changes in regional policy. We are proposing to concentrate help in a way that will bring the most assistance to the hon. Lady's constituency and to others.
The debate would have been more constructive if Opposition Members had recognised that these changes are not being forced on us by a crisis, being imposed by the IMF or being turned to in order to fight off any failure. We are changing our regional assistance policies because we want to and because we think that the new arrangements are right for the economic circumstances. Above all, we are doing so against a background of growing economic success.
The Labour party seems unwilling or unable to comprehend that. Almost every speech from Opposition Members was permeated by the view that because we are changing grants we must be cutting them. They think that one can improve a policy only by making vast increases in the amount of money given.
Opposition Members completely overlooked the fact that inflation is below 4 per cent.; that last year manufacturing output increased by 6·5 per cent.; and that manufacturing investment increased by 6 per cent., with the largest increases being experienced in Scotland, Wales and the north. That has been achieved by controlling expenditure as a proportion of GDP, by cutting taxes and by cutting regulation and control. That has given us seven


years of sustained growth in manufacturing productivity. Since 1979 it has increased by a remarkable 40 per cent. Britain is at the top of the league table instead of at the bottom.

Mr. Henry McLeish: As the Minister is outlining his success story, will he reflect on the figures between 1979 and 1986, which show that, in the regions that he is talking about, we lost 1,529,000 jobs, but that the south-east, East Anglia and the south-west lost only 9,000 jobs. Does that not show that there is a north-south divide?

Mr. Lang: No, it does not. Most of those jobs lost in the north were lost in the early years of the period that the hon. Gentleman quoted. Since 1983, employment growth in the midlands has been greater than in the south-east. We approach these changes reinforced by the fact that our policies have succeeded and are succeeding.
The hon. Member for Gordon, (Mr. Bruce), is the industry spokesman of the Liberal party, if you, Mr. Speaker, will pardon the expression. He said, with some justification, that we are changing the rules too often, which diminishes respect for them. I must tell the hon. Gentleman that so does changing one's policies. Over the Christmas period, I had to refer to an article in The Scotsman in which his policy for regional assistance was shown to be slashing business taxation only in Scotland and making Scotland a tax haven. I have no idea what his English colleagues think of that, still less the Liberal shadow Chancellor, but no wonder his party wants to put VAT on everything. No doubt, soon we shall be told that it will put VAT on Trident.
My hon. Friend the Member for Pudsey (Sir G. Shaw), who, like my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), is a gamekeeper turned poacher, welcomed a large proportion of our proposals but questioned the underlying philosophy of our regional policies. He said that there was a need, not so much for encouragement as for implantation. That statement implies a measure of dirigisme that I would find difficult to support.
With regard to his queries about inward investment, in which he quoted the examples of Germany and France. France is already discretionary in its regional assistance and, like us, the Germans are abolishing automaticity.
I share my hon. Friend's view of the importance of attracting inward investment and revitalising the regions —[Interruption.] — bringing new attitudes and techniques—

Mr. Speaker: Order. I ask the House to give a fair hearing to the Minister. This has been a well-natured debate.

Mr. Lang: I do not believe that the changes that we are making, whereby regional selective assistance will still be available for inward investment projects, will diminish the number of companies coming here.
I shall deal with the issue of spending, as I know that Labour Members are obsessed with who can spend most of the taxpayers' money. One would never have thought from the speech of the right hon. Member for Swansea, West, that it has been announced that Wales will receive an increase of 39 per cent. next year from the Welsh Office in total assistance to industry. One would never have thought from the speech of the right hon. Member for

Glasgow, Govan (Mr. Millan) that Scottish industry's budget will be increased by more than £25 million next year or that the SDA's budget will be increased by 8 per cent. in real terms.
The Labour Opposition point to the years when they were in power and make the sterile claim that they spent more in regional policy than we are doing, but they overlook the fact that their policy did not actually work. Manufacturing jobs, certainly in Scotland and probably in other areas, were lost at a far faster rate in the late 1970s than they have been in the past few years. Now, by contrast, unemployment is falling in a way that it never did in those years.
What they do not point out is that what they were taking out of the regions at that time through capital taxes, to which my hon. Friends have referred, and corporation tax, far outweighed what they were putting back in. Their corporation tax rate was 52p in the pound, compared with our present rate of 35p. So, quite apart from having to cope with high inflation and industrial unrest in that period, companies all over the country were having more than half of their profits drained off by the Treasury in Whitehall to pay for Labour's follies.
There were follies such as nationalisation, which was another anti-regional policy. Millions of pounds were taken from the hard-pressed taxpayer so that the Labour Government in Whitehall could take over the commanding heights of the economy in the midlands, the north and Scotland. We have reversed that policy and liberated industries such as Jaguar and British Aerospace from the shackles of centralised control and they are now galvanising the regions and enriching both the regions and the nation.

Mr. Donald Dewar: rose—

Mr. Lang: No, I will not give way. The hon. Gentleman did not take part in the debate.
If that is one way of pumping blood back into the arteries of regions, another is through the reform of non-domestic rates. It is estimated that this proposal, so bitterly opposed by the Opposition, will pump around £700 million into the economies of the north and the midlands.

Mr. Blair: The Minister said a moment ago that the industry budget for Scotland was increasing, but it shows a drop in 1978–88 and no real increase over the next few years.

Mr. Lang: If the hon. Gentleman waits until the publication of the Scottish commentary next month, all will be revealed to him.
The Opposition are not even right when they say that we are cutting the cash for regional policy. That is not what this exercise is about. I have already shown the spending trends in Wales and Scotland. In England, the public expenditure White Paper shows that spending is now expected to be up by £200 million over the next three years. However, cash levels are not the point. The point about the proposed changes to policy concerns value for money, not volume. It is not a cost-cutting exercise, but a cost-effective one.

Mr. Brittan: I am interested in what my hon. Friend has said. Does that mean that regional selective assistance for England will not be cash-limited under the new proposals?

Mr. Lang: Regional selective assistance is not cash-limited.
As to value for money, this is a cost-effective exercise and that is why I believe that we are right to move away from a situation where grants are given automatically, regardless of need, to giving grants on a more selective basis. The automaticity remained in our post-1984 changes, and now that our economy has continued to receover and grow, so that many companies have less need of taxpayers' funds to enable their projects to proceed, we should concentrate our resources more intensively where they can do most good, and that means putting them into projects in the assisted areas, which will benefit the economy, but would not go ahead without that help.
Whatever the Opposition may think of such an attitude, it is clearly one which endears itself to the business community—

Mr. Morgan: rose—

Mr. Lofthouse: rose—

Mr. Speaker: Order. Only the Minister or, if he gives way, one Member should be on his feet at a time.

Mr. Lang: Indeed, the Scottish Council for the Development of Industry, a body not normally regarded as friendly to the Conservative party, has said that it welcomes the recognition that it is more important to make incentives available selectively rather than automatically. The change in tone in favour of enterprise rather than narrowly defined industrial development is also welcomed.
One of the features of the recovery of the economy has been the unity of purpose and understanding that exists between the Government and industry. It is as pleased as we are that investment is rising so fast, because productive investment is the secret of success. Industry is as pleased as we are that the leverage achieved for Government funds invested is now reaching such remarkable levels. For example, every £1 invested in industry by the Scottish Development Agency is now triggering £13 of private investment. In Wales last year £104 million of Government investment triggered £760 million in private investment.
That is the way to get value for money for the taxpayer as well as increasing investment in the regions.

Several Hon. Members: rose—

Mr. Malcolm Bruce: The Minister is aware that his reply was wholly unsatisfactory. I am not concerned that he is not replying to Opposition Members' questions, but he should at least address points made by Conservative Members. They are not happy with his reply, and he is not acknowledging the criticisms even of former Cabinet Ministers.

Mr. Lang: Clearly, the hon. Gentleman was not listening to my replies—

Sir Giles Shaw: rose—

Hon. Members: Give way.

Sir Giles Shaw: If the Minister will permit a dirigiste gamekeeper, may I ask him the question again? Can we please have a straight answer to the question? Will grants under the regional selective assistance scheme not be cash-limited in future?

Mr. Lang: I can only tell my hon. Friend the policy as it exists at the moment. He has seen the proposals and the

figures in the White Paper. Demand for selective assistance cannot be anticipated. It will be essentially demand-driven and it is our purpose to ensure that sufficient proposals come forward.
There is now a new slogan in the Labour party, we are told. That slogan is "Labour Listens". It is a pity that it did not listen a bit earlier; it might have avoided some of the damage tht it inflicted on Britain's regions in the 1960s and 1970s. The hon. Member for Sedgefield (Mr. Blair) said that there had been 40 years of consensus on regional assistance. There was no consensus on selective employment tax—the particularly destructive instrument introduced by the Labour Government in the 1960s. That was Labour's idea of selectivity—not selective help but selective handicaps.
We are selective in distributing assistance to industry, but Labour was selective in the industries that it chose to clobber. Because Opposition Members had some primeval instinct that the only job worth having was bashing a bit of metal and developing industrial deafness, they decided to tax jobs in the service industries. They chose to attack the one part of the economy that had the best growth prospects and thus destroyed thousands of jobs.
In the 1970s Labour did a bit more listening and realised that it was not fair to attack only one section of the industrial community, so they brought in the national insurance surcharge and clobbered all industries, destroying thousands more jobs — especially labour-intensive jobs in the regions. As an added refinement, they thought, "How can we concentrate these remarkably beneficial policies on the regions?" So they listened a bit more and came up with the answer—scrap the regional employment premium, overnight with no warning. That meant 40 per cent. off all regional spending in Scotland and similar amounts in other parts of Britain as well as the loss of thousands more jobs. That shows the consistency of Opposition Members when in government and demonstrates their affection for the regions. For good measure, Labour slashed the roads programme by 20 per cent. to leave the regions more remote from their markets.
Labour listened all right; Labour Members listen with their mouths and talk through their hats. If I can persuade them to listen I would like to offer them some advice. They should drop their policies of high tax, high spend and high borrow, because they would destroy jobs. They should drop their policy to scrap nuclear electricity because that would increase electricity prices and destroy manufacturing jobs in the regions. They should drop their plans for a tax-raising assembly in Scotland because that would destroy jobs in Scotland.
The Opposition cannot bear the fact that we are introducing these proposals against a background of growing success. They are so attuned to failure —because in government they experienced nothing else—that they cannot even recognise success. They do not like our enterprise initiative because they do not understand enterprise and they do not trust initiative. Conservative Members recognise that to support a regional policy we first need a successful national economic policy. That we have achieved and will sustain — by bringing down inflation, controlling public expenditure and reducing the public sector borrowing requirement and by introducing better training, better industrial relations and now a better, more relevant, regional assistance policy.
The provisions in the Bill, together with the other changes that we have announced in our policies, will reinforce that success and carry it forward on a broad front to all the country. I commend the Bill to the House.

Question put, That the Bill be now read a Second time.

The House divided: Ayes 282, Noes 212.

Division No. 152]
[10 pm


AYES


Adley, Robert
Currie, Mrs Edwina


Aitken, Jonathan
Curry, David


Alexander, Richard
Davies, Q. (Stamf'd &amp; Spald'g)


Alison, Rt Hon Michael
Davis, David (Boothferry)


Allason, Rupert
Day, Stephen


Amess, David
Devlin, Tim


Amos, Alan
Dickens, Geoffrey


Arbuthnot, James
Dicks, Terry


Arnold, Jacques (Gravesham)
Dorrell, Stephen


Arnold, Tom (Hazel Grove)
Douglas-Hamilton, Lord James


Ashby, David
Dover, Den


Aspinwall, Jack
Dunn, Bob


Baker, Rt Hon K. (Mole Valley)
Durant, Tony


Baker, Nicholas (Dorset N)
Eggar, Tim


Baldry, Tony
Emery, Sir Peter


Banks, Robert (Harrogate)
Evans, David (Welwyn Hatf'd)


Batiste, Spencer
Evennett, David


Beaumont-Dark, Anthony
Fairbairn, Nicholas


Bellingham, Henry
Fallon, Michael


Bendall. Vivian
Farr, Sir John


Bennett, Nicholas (Pembroke)
Favell, Tony


Benyon, W.
Field, Barry (Isle of Wight)


Bevan, David Gilroy
Fookes, Miss Janet


Biffen, Rt Hon John
Forman, Nigel


Biggs-Davison, Sir John
Forsyth, Michael (Stirling)


Blackburn, Dr John G.
Forth, Eric


Blaker, Rt Hon Sir Peter
Fowler, Rt Hon Norman


Body, Sir Richard
Fox, Sir Marcus


Bonsor, Sir Nicholas
Franks, Cecil


Boscawen, Hon Robert
Freeman, Roger


Boswell, Tim
French, Douglas


Bottomley, Peter
Gardiner, George


Bottomley, Mrs Virginia
Garel-Jones, Tristan


Bowden, Gerald (Dulwich)
Gill, Christopher


Bowis, John
Glyn, Dr Alan


Boyson, Rt Hon Dr Sir Rhodes
Goodhart, Sir Philip


Braine, Rt Hon Sir Bernard
Goodlad, Alastair


Brandon-Bravo, Martin
Goodson-Wickes, Dr Charles


Brazier, Julian
Gorman, Mrs Teresa


Bright, Graham
Gow, Ian


Brown, Michael (Brigg &amp; Cl't's)
Gower, Sir Raymond


Browne, John (Winchester)
Grant, Sir Anthony (CambsSW)


Bruce, Ian (Dorset South)
Greenway, Harry (Baling N)


Buchanan-Smith, Rt Hon Alick
Greenway, John (Rydale)


Buck, Sir Antony
Gregory, Conal


Budgen, Nicholas
Griffiths, Peter (Portsmouth N)


Burns, Simon
Grist, Ian


Burt, Alistair
Ground, Patrick


Butler, Chris
Hamilton, Neil (Tatton)


Butterfill, John
Hampson, Dr Keith


Carlisle, John, (Luton N)
Hanley, Jeremy


Carlisle, Kenneth (Lincoln)
Hannam, John


Carrington, Matthew
Hargreaves, A. (B'ham H'll Gr')


Carttiss, Michael
Hargreaves, Ken (Hyndburn)


Cash, William
Harris, David


Channon, Rt Hon Paul
Haselhurst, Alan


Chapman, Sydney
Hawkins, Christopher


Chope, Christopher
Hayes, Jerry


Churchill, Mr
Hayhoe, Rt Hon Sir Barney


Clark, Dr Michael (Rochford)
Hayward, Robert


Clark, Sir W. (Croydon S)
Heathcoat-Amory, David


Clarke, Rt Hon K. (Rushcliffe)
Heddle, John


Colvin, Michael
Hicks, Mrs Maureen (Wolv' NE)


Conway, Derek
Hicks, Robert (Cornwall SE)


Coombs, Anthony (Wyre F'rest)
Higgins, Rt Hon Terence L.


Coombs, Simon (Swindon)
Hind, Kenneth


Cope, John
Hogg, Hon Douglas (Gr'th'm)


Cormack, Patrick
Holt, Richard


Couchman, James
Hordern, Sir Peter


Cran, James
Howard, Michael





Howarth, G. (Cannock &amp; B'wd)
Rifkind, Rt Hon Malcolm


Howell, Rt Hon David (G'dford)
Roberts, Wyn (Conwy)


Howell, Ralph (North Norfolk)
Roe, Mrs Marion


Hughes, Robert G. (Harrow W)
Rossi, Sir Hugh


Hunt, David (Wirral W)
Rost, Peter


Hunt, John (Ravensbourne)
Rowe, Andrew


Hunter, Andrew
Rumbold, Mrs Angela


Hurd, Rt Hon Douglas
Ryder, Richard


Irvine, Michael
Sackville, Hon Tom


Irving, Charles
Sainsbury, Hon Tim


Jack, Michael
Scott, Nicholas


Jackson, Robert
Shaw, David (Dover)


Janman, Timothy
Shaw, Sir Michael (Scarb')


Jones, Gwilym (Cardiff N)
Shephard, Mrs G. (Norfolk SW)


Jones, Robert B (Herts W)
Shepherd, Colin (Hereford)


Jopling, Rt Hon Michael
Shepherd, Richard (Aldridge)


Kellett-Bowman, Dame Elaine
Shersby, Michael


Key, Robert
Sims, Roger


King, Roger (B'ham N'thfield)
Skeet, Sir Trevor


Kirkhope, Timothy
Smith, Tim (Beaconsfield)


Knapman, Roger
Soames, Hon Nicholas


Knowles, Michael
Spicer, Sir Jim (Dorset W)


Lang, Ian
Spicer, Michael (S Worcs)


Lawrence, Ivan
Stanbrook, Ivor


Lawson, Rt Hon Nigel
Stanley, Rt Hon John


Lennox-Boyd, Hon Mark
Stern, Michael


Lightbown, David
Stevens, Lewis


Lilley, Peter
Stewart, Andrew (Sherwood)


Lloyd, Sir Ian (Havant)
Stradling Thomas, Sir John


Lloyd, Peter (Fareham)
Sumberg, David


McNair-Wilson, M. (Newbury)
Summerson, Hugo


Madel, David
Tapsell, Sir Peter


Major, Rt Hon John
Taylor, Ian (Esher)


Marland, Paul
Taylor, John M (Solihull)


Maxwell-Hyslop, Robin
Taylor, Teddy (S'end E)


Meyer, Sir Anthony
Tebbit, Rt Hon Norman


Miller, Hal
Temple-Morris, Peter


Mills, Iain
Thompson, D. (Calder Valley)


Miscampbell, Norman
Thompson, Patrick (Norwich N)


Mitchell, Andrew (Gedling)
Thorne, Neil


Mitchell, David (Hants NW)
Thornton, Malcolm


Moate, Roger
Thurnham, Peter


Montgomery, Sir Fergus
Townend, John (Bridlington)


Morrison, Hon Sir Charles
Tracey, Richard


Morrison, Hon P (Chester)
Tredinnick, David


Moss, Malcolm
Trippier, David


Neale, Gerrard
Trotter, Neville


Needham, Richard
Twinn, Dr Ian


Nelson, Anthony
Vaughan, Sir Gerard


Neubert, Michael
Viggers, Peter


Nicholson, David (Taunton)
Waddington, Rt Hon David


Nicholson, Miss E. (Devon W)
Waldegrave, Hon William


Onslow, Rt Hon Cranley
Walden, George


Oppenheim, Phillip
Walker, Bill (T'side North)


Page, Richard
Walker, Rt Hon P. (W'cester)


Parkinson, Rt Hon Cecil
Waller, Gary


Patnick, Irvine
Ward, John


Patten, John (Oxford W)
Warren, Kenneth


Pattie, Rt Hon Sir Geoffrey
Watts, John


Peacock, Mrs Elizabeth
Wells, Bowen


Porter, Barry (Wirral S)
Wheeler, John


Porter, David (Waveney)
Whitney, Ray


Portillo, Michael
Widdecombe, Miss Ann


Powell, William (Corby)
Wolfson, Mark


Price, Sir David
Wood, Timothy


Raison, Rt Hon Timothy
Woodcock, Mike


Redwood, John
Yeo, Tim


Renton, Tim
Young, Sir George (Acton)


Rhodes James, Robert
Younger, Rt Hon George


Rhys Williams, Sir Brandon



Riddick, Graham
Tellers for the Ayes:


Ridley, Rt Hon Nicholas
Mr. Alan Howarth and


Ridsdale, Sir Julian
Mr. David Maclean.


NOES


Abbott, Ms Diane
Armstrong, Ms Hilary


Adams, Allen (Paisley N)
Ashley, Rt Hon Jack


Alton, David
Ashton, Joe


Anderson, Donald
Banks, Tony (Newham NW)


Archer, Rt Hon Peter
Barnes, Harry (Derbyshire NE)






Barron, Kevin
Fearn, Ronald


Beckett, Margaret
Field, Frank (Birkenhead)


Bell, Stuart
Fields, Terry (L'pool B G'n)


Benn, Rt Hon Tony
Fisher, Mark


Bennett, A. F. (D'nt'n &amp; R'dish)
Flannery, Martin


Bermingham, Gerald
Flynn, Paul


Bidwell, Sydney
Foot, Rt Hon Michael


Blair, Tony
Foster, Derek


Blunkett, David
Foulkes, George


Boateng, Paul
Fraser, John


Boyes, Roland
Fyfe, Mrs Maria


Bradley, Keith
Galbraith, Samuel


Bray, Dr Jeremy
Garrett, John (Norwich South)


Brown, Gordon (D'mline E)
George, Bruce


Brown, Nicholas (Newcastle E)
Gilbert, Rt Hon Dr John


Brown, Ron (Edinburgh Leith)
Gordon, Ms Mildred


Bruce, Malcolm (Gordon)
Grant, Bernie (Tottenham)


Buchan, Norman
Griffiths, Nigel (Edinburgh S)


Buckley, George
Griffiths, Win (Bridgend)


Caborn, Richard
Harman, Ms Harriet


Callaghan, Jim
Hattersley, Rt Hon Roy


Campbell, Ron (Blyth Valley)
Haynes, Frank


Campbell-Savours, D. N.
Healey, Rt Hon Denis


Canavan, Dennis
Heffer, Eric S.


Clark, Dr David (S Shields)
Henderson, Douglas


Clarke, Tom (Monklands W)
Hinchliffe, David


Clay, Bob
Holland, Stuart


Clelland, David
Home Robertson, John


Clwyd, Mrs Ann
Hood, James


Cohen, Harry
Howarth, George (Knowsley N)


Cook, Robin (Livingston)
Howell, Rt Hon D. (S'heath)


Corbett, Robin
Hoyle, Doug


Corbyn, Jeremy
Hughes, John (Coventry NE)


Cousins, Jim
Hughes, Robert (Aberdeen N)


Crowther, Stan
Hughes, Roy (Newport E)


Cryer, Bob
Hughes, Sean (Knowsley S)


Cummings, J.
Hughes, Simon (Southwark)


Cunliffe, Lawrence
Ingram, Adam


Cunningham, Dr John
Janner, Greville


Dalyell, Tam
John, Brynmor


Darling, Alastair
Jones, Barry (Alyn &amp; Deeside)


Davies, Rt Hon Denzil (Llanelli)
Jones, Ieuan (Ynys Môn)


Davies, Ron (Caerphilly)
Jones, Martyn (Clwyd S W)


Davis, Terry (B'ham Hodge H'l)
Kaufman, Rt Hon Gerald


Dewar, Donald
Kilfedder, James


Dixon, Don
Kinnock, Rt Hon Neil


Dobson, Frank
Lambie, David


Doran, Frank
Leadbitter, Ted


Douglas, Dick
Leighton, Ron


Dunwoody, Hon Mrs Gwyneth
Lestor, Miss Joan (Eccles)


Eadie, Alexander
Lewis, Terry


Eastham, Ken
Livsey, Richard


Evans, John (St Helens N)
Lloyd, Tony (Stretford)


Fatchett, Derek
Lofthouse, Geoffrey


Faulds, Andrew
Loyden, Eddie





McAllion, John
Rees, Rt Hon Merlyn


McAvoy, Tom
Reid, John


McCartney, Ian
Richardson, Ms Jo


Macdonald, Calum
Roberts, Allan (Bootle)


McFall, John
Robertson, George


McKay, Allen (Penistone)
Robinson, Geoffrey


McKelvey, William
Rogers, Allan


McLeish, Henry
Rooker, Jeff


Maclennan, Robert
Ross, Ernie (Dundee W)


McNamara, Kevin
Rowlands, Ted


McTaggart, Bob
Sedgemore, Brian


McWilliam, John
Sheerman, Barry


Madden, Max
Sheldon, Rt Hon Robert


Mahon, Mrs Alice
Shore, Rt Hon Peter


Marek, Dr John
Short, Clare


Marshall, Jim (Leicester S)
Skinner, Dennis


Martin, Michael (Springburn)
Smith, Andrew (Oxford E)


Martlew, Eric
Smith, C. (Isl'ton &amp; F'bury)


Maxton, John
Smith, Rt Hon J. (Monk'ds E)


Meacher, Michael
Snape, Peter


Meale, Alan
Soley, Clive


Michael, Alun
Spearing, Nigel


Michie, Bill (Sheffield Heeley)
Speller, Tony


Michie, Mrs Ray (Arg'l &amp; Bute)
Steinberg, Gerald


Millan, Rt Hon Bruce
Stott, Roger


Mitchell, Austin (G'f Grimsby)
Strang, Gavin


Moonie, Dr Lewis
Straw, Jack


Morgan, Rhodri
Taylor, Mrs Ann (Dewsbury)


Morley, Elliott
Thomas, Dafydd Elis


Morris, Rt Hon A (W'shawe)
Turner, Dennis


Morris, Rt Hon J (Aberavon)
Vaz, Keith


Mowlam, Marjorie
Wall, Pat


Mullin, Chris
Walley, Ms Joan


Murphy, Paul
Warden, Gareth (Gower)


Nellist, Dave
Wareing, Robert N.


Oakes, Rt Hon Gordon
Welsh, Michael (Doncaster N)


O'Brien, William
Wigley, Dafydd


O'Neill, Martin
Williams, Rt Hon A. J.


Orme, Rt Hon Stanley
Williams, Alan W. (Carm'then)


Patchett, Terry
Wilson, Brian


Pendry, Tom
Winnick, David


Pike, Peter
Wise, Mrs Audrey


Powell, Ray (Ogmore)
Worthington, Anthony


Prescott, John
Young, David (Bolton SE)


Primarolo, Ms Dawn



Quin, Ms Joyce
Tellers for the Noes:


Radice, Giles
Mrs. Llin Golding and


Randall, Stuart
Mr. Frank Cook.

Question accordingly agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).

London Regional Transport

The Secretary of State for Transport (Mr. Paul Channon): I beg to move,
That the draft London Regional Transport (Levy) Order 1988, which was laid before this House on 11th January, be approved.
Any discussion of London Regional Transport's policy and performance is inevitably overshadowed at present by the terrible fire at King's Cross on 18 November, in which 31 people lost their lives. At the outset of the debate, I repeat the sympathy which I know is felt by the whole House and which I expressed immediately following the fire. I know that the House will join me in again expressing sympathy for the continued pain suffered by the injured and bereaved. I am equally sure that the whole House shares the Government's determination that all possible steps should be taken to find the cause of the fire and to ensure that any lessons that can be learnt are acted upon swiftly and effectively. I know that the chairman and boards of LRT and London Underground also share that determination.
It is not the purpose of this debate to speculate on the cause of the fire; nor would it be right for us to attempt to do so. That is a matter for the formal investigation led by Mr. Desmond Fennell, QC. Public hearings will begin again next Monday, 1 February. Mr. Fennell and his team, with the advice of experts, will consider in depth all the available evidence. I shall study the conclusions reached carefully, and report to the House as quickly as possible.
LRT's performance and plans are set out in its annual business plan, published earlier this month. Sound progress has been made. LRT has improved efficiency and reduced the revenue deficit. That has allowed record levels of investment to be funded, while the burden on taxpayers and ratepayers has been reduced. This year, productivity improvements of 5 per cent. are forecast. Passenger levels are also about 5 per cent. up, and the revenue deficit is expected to be approximately halved to £45 million compared with 1986–87. At the same time— this is an important point—investment is being increased to £294 million—a real increase of over 14 per cent. over last year. This has been secured as a result of strong growth in demand and improvements in efficiency, and will, I think, be recognised as an impressive achievement.
The progress made in turning round the business since LRT was formed will continue in 1988–89. For the first time since the early 1970s, LRT as a whole expects to be able to cover its operating costs from revenues, and thus will not require revenue support from the Government. London Buses will continue to need revenue support of £92 million, but will receive it from the revenue surpluses earned by London Underground rather than from the Government grant. Taking LRT as a whole, the annual business plan envisages a revenue surplus of £9 million, but I would emphasise that that will be a surplus before depreciation and revewals provisions. Both London Buses and the underground will continue to require and receive substantial support to cover their trading losses after depreciation and renewals. That, in addition to grants, will continue to fund new investment.
The year, 1988–89, will see a continuation of the policy of supporting the high levels of investment which are required to modernise and expand the capacity of the

network. The Government grant of £190 million will, together with internal resources and external contributions, enable LRT to invest a record £365 million—£1 million a day. That is nearly 60 per cent. more in real terms than in 1984–85.

Mr. Simon Hughes: How much of that investment is already committed to safety and security, which are of greatest immediate public concern?

Mr. Channon: Considerable sums of money are involved in safety. I shall try to answer the hon. Gentleman's question in more detail in my winding-up speech. As Sir Keith Bright has made clear, safety is paramount in all that London Underground does. It is an important matter that the House will wish to debate in detail, but we shall be better informed after the inquiry into the disastrous fire at King's Cross.

Mr. Sydney Bidwell: Will that mean that in future hard-pressed commuters in London will be able to ride in trains that are less overcrowded than they have been for many years?

Mr. Channon: That will happen as our investment programme takes effect. It is one of the purposes of the investment programme. I shall give the House some of the details of investment for the next few years. An important and very welcome development is the degree of external funding for extensions to the Docklands light railway. Three quarters of the investment planned in 1988–89 will be funded by the developers of Canary wharf, or out of the proceeds from higher land values resulting from the construction of the railway. That is a fine example of public and private sector bodies working hand in hand to regenerate an inner-city area.
As usual, the underground will account for the lion's share of LRT's investment expenditure in 1988–89. As well as providing for essential renewal of the infrastructure—signalling, track, lifts and escalators — much of the investment will yield benefits in more modern and attractive conditions for passengers, and more reliable equipment. As far as London Buses is concerned, the investment emphasis is on management systems to increase efficiency and reduce costs further. Trials of electronic ticketing systems — designed to improve boarding times for one-person operated buses—are also in progress.
As far as bus services are concerned, I expect the impetus for improved performance in the immediate future to come from a greater use of tendering. LRT will continue to push forward its programme of seeking competitive tenders for bus services. During 1988–89, it expects to increase the proportion operated under contract by 50 per cent. to about 27 per cent. of its total mileage. That should mean better value for money. LRT is realising significant net savings on routes already operated under contract with additional passengers attracted to the more reliable and generally improved services.
In the slightly longer term, we intend to see Londoners enjoying the benefits of deregulation as soon as practicable. In preparation for that, I have asked LRT to bring forward early proposals for the restructuring of London Buses Ltd. into smaller units which will be able to operate commercially in a competitive environment.
As far as the underground is concerned, the major longer-term challenge after the lessons of King's Cross


have been learnt is dealing with the continuing growth in demand. Some £75 million of investment has already been authorised for measures to relieve overcrowding. Those include the purchase of 16 new trains and improvements to ease bottlenecks at Angel, Tower Hill and Farringdon stations.
Further proposals are expected, and the identification and evaluation of longer-term options for increasing the capacity of the system is in hand. Within the next few months I expect LRT to bring forward proposals for a comprehensive re-equipment programme for the Central line, the cost of which will approach £500 million. A new generation of high-performance rolling stock is planned. Together with a completely new signalling system, that should result in a faster, more reliable service in the 1990s. It is likely to be followed by a similar re-equipment programme for the Northern line.
Finally, I turn to the order itself.

Mr. Robert Adley: While we welcome the Docklands light railway, is it not almost a tragic waste of time that that railway system is incompatible in operational terms with the rest of London Regional Transport and with British Rail? Will the Minister include in any future proposals the necessity of building compatible railway systems in the Greater London area?

Mr. Channon: I shall certainly examine what my hon. Friend has said. The point is not an academic one. As I have said, many imaginative proposals are coming along, some of which are from the Docklands light railway, some from London Underground and others from British Rail. Therefore, I hope that there will be all sorts of exciting new investments to improve public transport by rail in London.
I shall now move on because I know that many hon. Members wish to speak. I shall try to answer all their questions at the end of the debate, if the House will allow me.
The proposed levy will pass on to London's ratepayers the benefits of LRT's improved performance. The figures tell their own story. They reflect the way in which the business has been turned round over the past few years. A levy of 6·07p in the pound is proposed. That is 1·7p, or over 20 per cent., less than last year and 4·73p, or over 40 per cent., less than in 1985–86, the first year of the levy. That means that in real terms the burden on London's ratepayers will have been nearly halved over just three years.
I commend the draft order to the House.

Mr. Tony Lloyd: It is somewhat amazing to hear the Secretary of State talking about the sound progress of London Regional Transport and passenger levels being up by 5 per cent. Everybody who is a regular user of the underground system knows that it has come in for considerable criticism, not just from my hon. Friends but from Government supporters and even from that sound advocate of Conservative policy, the Evening Standard. On 30 November, only a few days before the King's Cross disaster, the Evening Standard had a headline on its lead story, which read:
Find out why the Tube is So Bad.

It talked about an independent inquiry that had been ordered by Lord Young because conditions on the underground were so bad. He said:
Up to a dozen stations a day are often without a lift and escalator services since the decision was taken to put maintenance and installation out to private tender.
I am concerned about the Secretary of State losing his job, not because of the interest of Lord Young but because of the inability of LRT to deliver any of the goods that we have been promised.
My hon. Friend the Member for Blackburn (Mr. Straw) asked Sir Keith Bright, the chairman and chief executive of LRT, why services on the Northern line were so bad. Sir Keith Bright rightly said that over the past two years or so up to November of last year, the number of passengers using the underground had increased dramatically. That increase was due not to any improvement in the operation of the underground system but simply because those passengers were forced on to the underground by the lousy road conditions in London and because Government decisions had not solved the road problems and, at the same time, had not done anything to solve the problems of the tube.
Sir Keith Bright went on to say:
The sequence of events which actually occurred during the critical months of September and October now indicates that too much risk was accepted in the interest of economy and I believe we have all learned a lesson for the future.
I hope that that is right. The reality is that the Government, who have systematically under-invested in London's transport system, have had a willing ally in the penny-pinching, cost-cutting exercises of the management of LRT.

Mr. Sydney Chapman: Surely the hon. Gentleman must know, even if he is not a London Member, that yesteryear the increasing subsidies went to cover operating losses. At long last we have a system whereby the revenues are now paying for much-needed capital investment.

Mr. Lloyd: The whole concept of funding capital spending directly from revenue is something that most people would recognise as nonsense. It is normal to allow revenue to cover the cost of capital in the long run, but not to fund capital from revenue. Conservative Members may laugh, but that simply indicates a lack of understanding of normal economics and accounting principles.
Even during the four years when I have been traveling regularly in London, I have seen a massive deterioration in the standards of travel on the tube. The Minister talked about reducing the number of passengers per tube as though it was a great achievement, yet, during the past five years, the number of people travelling in each carriage has increased dramatically. The response of LRT has been not to put on more trains, but to suggest removing seats from trains to make more room for standing passengers. There is no concept of comfortable travel. Instead, we shall have strap-hangers and the Japanese system of shoving people in using sticks. Indeed, LRT should import a few Japanese pushers to make sure that they can get more people into our underground trains.
The Secretary of State talked about the 16 trains that LRT is about to purchase. That purchase was planned by the Greater London council when it was in charge of London Transport, which was some years ago. The GLC planned to buy the trains because it recognised the need to reinvest in the rolling stock. But that reinvestment did]


not take place in the years following abolition of the GLC, and it is now paraded by the Secretary of State as a great triumph that is about to take place. Those 16 trains will increase the amount of train mileage by 11 per cent. at a time when the number of passengers has increased by 50 per cent. That is why the system is falling apart and decaying.
The reality with LRT is that, where there has been investment, it has been under-investment, and the attitude of management has been cost-consciousness and cost-saving, at the expense of the interests of passengers. The travelling public in London are not, in the final analysis, worried about the cost of the service through the rates. Of course, it is a consideration, but it is considered alongside the wish for a tube to turn up to take them where they want to go. That is equally important to them, but it is not happening on the underground today. It is also important for the public to feel safe on the underground. King's Cross has been a great stimulus to the thought that people are no longer safe on the underground. For all those reasons, the travelling public believe that they are getting a bad deal from LRT.
There has been some investment in the transport system, especially in bus garages. The garage at Plumstead was improved at a cost of about £6 million, but some time later LRT tried to close the garage which, as a result of the tendering process, became surplus to requirements. That is the sort of inane and irrelevant investment that LRT has made, which is completely irrelevant to the needs of the travelling public and a sound economy. It is relevant only to an organisation which sees cost-cutting as the only way forward.
We have seen how that cost-cutting affects all aspects of travel, especially safety. I refer at this stage not directly to King's Cross, but to a report which appeared in the Evening Standard two days after the King's Cross disaster. It stated:
London Underground chiefs were today planning a dramatic about face on their decision to delay vital safety improvements at 10 major stations.
This could lead to a restart of the
£9 million programme to fit false ceilings with emergency fire-breaks on all Victoria and Jubilee tunnels and escalator halls.
The LRT spokesman said:
The programme to install these fire-breaks is one of the action points arising from the Oxford Street station fire inquiry in 1986.
That did not go ahead until the King's Cross disaster forced London Regional Transport to reassess its objectives.
The article went on:
King's Cross was one of the 25 stations targeted for emergency fire-breaks.

But that was not done at King's Cross or at several other stations. It is ridiculous that in 1987–88 a cost-cutting exercise which saved £3 million prevented those safety programmes from going ahead.
Great play has been made of the fact that London Regional Transport can now fund its capital programme from revenue. We know why LRT can fund its capital programme in that way. A monopoly market is driven off the roads on to the public transport system because of the appalling state of London's roads and the travelling public is forced to use those systems and forced to accept fare increases imposed by LRT this year of more than 9 per cent. on average.
In some areas, and especially in the inner-city areas where fare increases have been higher than average for several years, 9 per cent. is no small increase. However, the travelling public will accept those fare increases because they have no choice. Yet the increases run directly counter to the objectives set for LRT as long ago as 1985. It was then stated that LRT's fare increases would be pegged no higher than the level of inflation.
On 15 December my hon. Friend the Member for Lewisham, Deptford (Ms. Ruddock) asked the Minister
whether the objectives for London Regional Transport laid down by the Secretary of State … are still in force.
The reply was:
The 1984 objectives cover the financial years 1985–86 to 1987–88. They have not been superseded or supplemented and are still in force."—[Official Report, 15 December 1987; Vol. 124, c. 430.]
If they are still in force, the Secretary of State should explain why the objective that fare increases should be at a level no greater than inflation has been overridden in the interests of fiscal convenience for LRT and of saving the Government a few bob in their contributions to LRT.
The reality is that the sloppiness and penny-pinching financial consciousness of LRT's management has had a devastating effect on the quality of transport. However, the Government's decision to underfund LRT has meant that London has a transport system that bears no comparison with Paris, the nearest comparable capital city. The Secretary of State made great play of the number of people travelling on the underground. Some 2·5 million people a day are carried on the London system. In Paris, 5·5 million people are carried on a modern, clean, efficient system that is liked by the travelling public.
If London had such a system, if the Government were prepared to invest the money to provide such a system, and if the management of LRT was prepared to operate such a system, it would be possible to see a first-class public transportation system in London and we could also get the cars off the road. The Government are prepared to spend £50 million a mile on motorway systems. We should save that money and begin to accept that London needs public transport. That is the way to solve London's transport problems.

Mr. Robert Adley: I am grateful for the opportunity to intervene briefly in the debate, and I hope that I am not preventing any of my London colleagues from speaking.
I was slightly surprised to hear the hon. Member for Stretford (Mr. Lloyd) complain that the Government's policies were forcing people off the roads and on to public transport. I thought that that had been Labour party policy for years. One of the problems of this type of debate is that the Opposition believe that they must oppose everything that the Government are doing. I constantly try to be dispassionate about these affairs, although not always to the pleasure of my right hon. and hon. Friends on the Government Front Bench. I can hear the hon. Member for West Bromwich, East (Mr. Snape) making strange gurgling noises. If he believes that I fail in that task, I am sure that he will gladly tell me so, and I should be pleased to give way to him. I am grateful to the hon. Gentleman for staying firmly in his place.
Political dogma and public transport are and always have been uneasy bedfellows. Therefore, I welcome wholeheartedly the fact that there has been an increase in the number of passengers on London's buses and underground. I can tell my ministerial colleagues that their policy of nationalising London Regional Transport has been a considerable success. They may not put matters like that, but that is what has happened. LRT was nationalised, the Government are happily taking the credit for the results of that policy, and I do not want to detract from that.
The fact that London has escaped the full rigours of bus deregulation that has taken place in other parts of the country may give us a chance to look a little dispassionately at what we intend to do in London with the buses before we subject them to the same treatment. There have been distinct advantages in some aspects of bus deregulation. Frankly, there have been some problems, too. I hope that my right hon. and hon. Friends will look at what has happened. My hon. Friend the Minister for Public Transport is glaring at me. I dare not criticise any aspects of bus deregulation.
My agent, who lives in a village called Burton in my constituency, and I are trying but failing to obtain assurances from private bus companies operating in that part of Dorset that they are not paying bonuses to drivers to beat each other to bus stops to pick up passengers. Serious road safety consequences could arise in that village. That is one possible by-product of deregulation which needs to be examined.
The other day, my right hon. Friend the Secretary of State kindly saw my hon. Friend the Member for Westminster, North (Mr. Wheeler), my right hon. Friend the Paymaster General and me to discuss the effect of coach deregulation in London, which has been disastrous. Not only do the railways face grotesque unfair competition from vehicles that pay none of the fixed costs that the railways must pay, but the use of unsuitable roads by coaches, which were previously controlled by the traffic commissioners, has provided a situation that the Commissioner of Police of the Metropolis has described as intolerable. I regret that the Conservative party's transport policy has given the Metropolitan police so much extra work to do.

Mr. Banks: Will the hon. Gentleman give way?

Mr. Adley: I am being brief. The hon. Gentleman can make his own speech.

Mr. Banks: Go on.

Mr. Adley: Very well; I shall give way.

Mr. Banks: I shall not make a speech. What was the Minister's response to the delegation? The hon. Gentleman appears to me to be the lone voice of sanity in Conservative transport policy.

Mr. Adley: That was one of the most unkind and unhelpful things that has ever been said to me. It will take me years to live it down. My right hon. Friend was totally sympathetic. He allowed us to put points with which he was not entirely familiar. He gave instructions that satisfy me that the problem will be studied in depth. If a satisfactory solution cannot be arrived at by negotiation between the coach industry and the local authorities concerned, further legislative action may be contemplated.
The side effects of deregulation cannot always be envisaged when various pieces of legislation are passed. I refer to the use of unsuitable roads and the illegal parking of commuter coaches on double yellow lines in London. Also, commuter coaches are left with their engines running for hours on end to generate air conditioning in the summer and heating in the winter for passengers on coaches that are in competition with British Rail. These coaches are heavily subsidised by the taxpayer. As Sir Robert Reid said to me the other day—

Mr. John Wheeler: Who is he?

Mr. Adley: He is the chairman of British Rail.
He said that if he were to park his trains where coach operators park their coaches, there would instantly be an outcry. Of course he is right.

Mr. Allan Rogers: Will the hon. Gentleman give way?

Mr. Adley: I shall not give way in case I am praised again by the Opposition. I am not quite sure why the hon. Gentleman is waving his arms about. I am not a bookmaker. I cannot understand what he is saying. Very well, I shall give way.

Mr. Rogers: The hon. Gentleman mentioned that problems were not foreseeable. In Committee, my hon. Friend the Member for Wigan (Mr. Stott) pointed to such problems time and again. They could easily have been foreseen, but they were ignored and neglected by the Government.

Mr. Adley: The persuasiveness of the hon. Member for Wigan (Mr. Stott) caused me not to vote for the Bill at its Third Reading. Therefore, I am entitled to make my comments now.
We thus have several undesirable consequences of deregulation: the use of unsuitable roads; illegal parking; engines left running, causing considerable pollution to many of London's citizens; and, of course, the problem of speeding.
As my right hon. Friend the Secretary of State fairly claims, while London's ratepayers are being saved a lot of money by the tremendous improvements made in the management of London Transport, many of the inner London boroughs are now having to spend money on kerb


extensions and the construction of rows and rows of bollards to keep coaches out of particular roads —coaches which are there as a direct result of deregulation.
My right hon. Friend has done some good things. Some of them have had unfortunate side effects. The replacement of the bad, ineffective, GLC-driven management of London Transport has been wholly welcome; and perhaps the continuing debate about the relationship between central Government, local government and public transport could benefit from what happened in the same debate about our railways in the 1950s and 1960s.
Therefore, I plead with my right hon. and hon. Friends and with Opposition Members not to let political dogma become our chief motivation in these debates on public transport.

Mr. Simon Hughes: The House is grateful to the hon. Member for Christchurch (Mr. Adley) for being able to say, somewhat more influentially than some of us, some salient things about coach deregulation. I remember that my former hon. Friend the Member for the Isle of Wight, Mr. Ross, made very similar noises when that Bill passed through the House.
As an hon. Member representing a London constituency living less than three miles away and coming over Westminster bridge every day, I ask the Secretary of State and the Minister of State to take serious note of the points made. Coach congestion is a major safety and amenity problem; it is totally unsatisfactory and needs serious attention.
Inevitably, a debate on an order of this kind has two elements: normally a short debate on the order and a longer debate on London Regional Transport. On the order itself, it is a foolish politician who resists a reduction in the amount of rates that his ratepayer constituents will pay, and the sharing out of the burden of paying for London transport between the grant paid by the taxpayer and the contribution paid by the fare payer is obviously a refined formula. In general terms, I do not think that any great exception can be taken to the idea that the balance be altered, although the fare payer has paid considerably more than inflation has caused prices to rise. There are some disadvantages in that—and substantial increases at any one time often discourage regular use of public transport.
I would like to put specific points to the Secretary of State about the various operations of public transport in London, starting with buses. There is still great dissatisfaction with one-person operated buses. They are slower. The most regular route from near my front door to near the front door of the House, the 53, has just gone on to one-person operation. There is the new ticketing mechanism. It is slower and results in general discontent; and at night, although I cannot remember whether the pattern has been consistent, and assaults may have gone down some of the time, for many passengers it is much more perturbing that there is only one person in charge and that person is closed in.
One-person operation is also less safe when it comes to boarding and disembarking. An elderly passenger was killed recently when her foot was trapped in the door and she was dragged along the road. That sort of accident, to say nothing of other safety risks, is one of the

consequences of literally one person being in charge of a bus. There is no one there to help people—people with shopping, people with young children, elderly people.
So the public are still very resistant to the idea of one-person operation, in addition to the obvious consequence that it has for the staff of London Regional Transport. I am not one of those who argue that jobs should be created for the sake of it, but creating jobs for safety, to make sure that a system is safe, is surely acceptable and appropriate. The rush towards one-person operation goes against the will of the majority of people and delays buses; there is no doubt that services are slower.
Waiting times have increased. The graph in LRT's annual report makes it clear that, although the increase is not substantial, whereas waiting times for all buses stayed the same or decreased between 1982 and 1984–85, for high and low frequency services and the underground, waiting times have increased. Not only have they increased, the average waiting time for buses was nearly seven and a half minutes for high frequency services. Over the whole day there was a 27·1 per cent. chance of waiting more than 10 minutes. The wait is increased as a result of one person operated buses.
Regularly, people have to wait not 10 or 20 minutes but half an hour, three quarters of an hour, or hours. I wrote to the chairman of LRT on this matter because it is unacceptable that when one is waiting for the last bus it never arrives. That has happened on more than one occasion when I have been waiting outside this building.
With regard to competitive tendering, Kentish Bus runs some routes—the No. 42 is an example. Someone who frequently works on my team regularly tries to use that route but reports that that bus is up to an hour late two or three times a week. The regularity and reliability of the service is crucial in any city, particularly a capital city. The service is not being maintained at a high standard.
I ask the Secretary of State to show more urgency and less complacency about this matter and to pass that complaint on to LRT. It still does not understand that it is fundamentally important to some people that the bus arrives and that there are enough buses. It does not help the productivity of the capital city if that does not happen.
There are the same problems with regard to the staffing of the underground. There are complaints that there is more graffiti, that violence is increasing and that there is more rubbish. We await the inquiry into the King's Cross tragedy, but, as the hon. Member for Holborn and St. Pancras (Mr. Dobson) said immediately after the disaster, clearly the lack of attention given to cleanliness — the passenger committee is concerned about this matter and it mentions it in its report—is because staffing has been reduced.
Increasingly, people are sleeping in tube stations. They have nowhere else to go; the Government's housing policy is not very helpful in that regard. Inevitably, on occasion such people represent a fire risk.
There must be proper and adequate staffing. The number of underground staff has reduced from 21,598 to 20,612 and the number of bus staff has reduced from 24,665 to 22,389 in a way that is a risk to safety, cleanliness and good management.
We must spend more, particularly on the underground, and I would be grateful if the Secretary of State would deal with my question about the Government's commitment to safety and security budgeting in the investment programme.
I should like to make one general point for the Secretary of State to consider. The Travelcard system is clearly right. The more that we can integrate British Rail, the underground and the buses the better. It is still impossible to obtain a Travelcard to travel across more than one zone. In the central zone one cannot obtain only a bus or tube card. An unfair financial burden is therefore placed on some people.
Every year I make the ritual plea of south London Members of Parliament for the area to receive some additional benefit from public transport. It receives substantially less than the region north of the river. The white hole still exists—look at any London Transport map. There is still no east-west connection between the northern line and the arm of the metropolitan line.
There are arguments about the sort of railway that the docklands light railway should have been north of the river, but the south does not have a docklands light railway or anything like it. The previous Minister of State said that she recognised the problem and that she would do something about it. Since I have been in the House, nothing has happened to improve the matter and fill that gap.
Secondly, I ask that we look at the security of the underground network, particularly in relation to women's security, and at accessibility for the disabled. Too often, that is still inadequate, and a means by which people could travel around the capital city is not used. For example, lifts are regularly out of order, where there are lifts, and one cannot get access.
Lastly, although £5 million is to be given to Dial-a-Ride this year, there is concern that that might be reduced. It would be helpful—and London Members have regular correspondence about this with the Under-Secretary, the hon. Member for Eltham (Mr. Bottomley) — if the Secretary of State could assure those who rely for their mobility on Dial-a-Ride that the Government are committed to retain at least the real value of their commitment, and that they would plan to increase it substantially. Those most disadvantaged in transport mobility terms need public transport services most. Diala-Ride is a good example and it needs that commitment from the Secretary of State.

Mr. Hugo Summerson: I welcome this opportunity to say something about what my constituents feel about the services given by London Regional Transport. I have lived in London for nearly 12 years now, and during that time, I have got about by bicycle, bus or tube, so I see a great deal of public transport in London. This evening, for instance, I went out to my constituency on the Victoria line, and I am sorry to say that that journey was like most journeys made on the tube nowadays. The trains are unpunctual. They are filthy outside and revolting inside. They do not come when it is announced that they will come. Often, the signboard says that the train will go right through to Walthamstow, but it does not. It stops at King's Cross, and everyone gets kicked off. If one is a bit luckier, it will go on to Seven Sisters and everyone is kicked out.
This evening my train stopped at Seven Sisters. Admittedly, the board said that it would, so that is fair enough. I walked through to the other platform and I

waited—and waited. I waited with lots of other people and during that time four other trains came up the Victoria line, all of which stopped at Seven Sisters, and more and more passengers were waiting on the platform for a train to take us to Walthamstow. We had to wait for about 15 minutes, and the people waiting with me were not very happy, and I do not blame them.
Another station that I use regularly is the Angel, which must be one of the most filthy and disgusting stations in the entire system. It is a truly horrible station, but I have to use it from time to time. Two new lifts were recently put in, but the chances are that they are out of order and one has to walk down the emergency steps. There are hundreds of them and as one gets nearer the bottom, they get smellier and smellier and even more revolting.

Mr. Jeremy Corbyn: I agree thoroughly with the hon. Gentleman's description of the Angel station and the lifts there. Is he aware that LRT is trying to privatise the lift maintenance service, and dismiss the lift repair teams that have done the work so successfully and for so long, and that one of the major causes of delays in repairs is privatisation?

Mr. Summerson: I am sure that the hon. Gentleman will know that the Angel is due to be entirely rebuilt, which I hope will take care of the problem there. I will come on to privatisation. At the moment I am setting out what I feel is wrong with the system.
It is not only the underground — it is the buses as well. Many's the time that I have had to stand out in the pouring rain in one of those apologies for a bus shelter. The wind whips up the street and one's trouser legs and shoes become soaked. As an hon. Member, one is supposed to turn up at one's appointment looking quite smart. However, when one eventually arrives, the creases in one's trousers have disappeared. One's trousers appear all baggy around the knees and ankles and that terrible white bloom has appeared on one's shoes. One does not look at all like a Member of Parliament.
I am happy to see the hon. Member for Leyton (Mr. Cohen) in his place. When he and I were serving on a Standing Committee, he arrived late. I do not know whether that is endemic among Labour Members, but the hon. Gentleman told me that he had been delayed on the tube. That should not happen. Despite what Opposition Members say, the tubes and buses have been funded by the Government and the ratepayer to an enormous extent; LRT gets enormous amounts of money. I am concerned to know what LRT does with that money.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) talked about staff shortages. Those of us who use the underground frequently know perfectly well that, before one can go on the escalator — if the escalator is not broken—one has to pass through a sort of pinch point where a man is sitting in a cubicle. Now, what is he doing?

Mr. Adley: Knitting.

Mr. Summerson: Yes, he may well be knitting. He is reading his paper, or doing the pools or doing his knitting. He is not in the least bit interested in the ticket that one dutifully shows him. One may have to drop all one's luggage to get the ticket out of one's wallet, and I can never find it when I want it. Eventually one gets the ticket out


and shows it to the man and he does not even look up. Why cannot he be sent to work sweeping the carriages or scrubbing off graffiti?
The answer does not lie in trying to keep the public transport system going as a public transport system. [HON. MEMBERS: "Ah."] Now we get to it. The London underground system should be coining money. It is a monopoly. It carries millions of passengers and it is carrying more and more. It ought to be able to provide a decent, regular, clean, tidy and safe service for the people of the capital. The only way forward is to sell off the lines to private enterprise. They could be sold off individually—

Mr. Peter Snape: Does the hon. Gentleman think that if L.RT were sold off and privatised it would become as warm, caring and efficient as British Telecom?

Mr. Summerson: It will be a great deal better than British Telecom. One needs to consider the separate functions of the two companies. The function of LRT is to provide transport for the people of London, and the best way to do that is to ensure that private enterprise takes over and runs LRT. In particular, we need to sell off London Underground, which will mean a decent service both for the people of London and for visitors.

Mr. Nigel Spearing: Clearly the hon. Member for Walthamstow (Mr. Summerson) did not realise that his right hon. Friend the Minister had told the House that London Underground already makes a £92 million a year surplus. The reason why the Government are pressing on lack of staff and not doing what they should do for the London underground is that Ministers want to transfer that £92 million to the buses, which they are shortly to sell off.
Responsibility for London transport is no longer at 55 Broadway; it lies with Transport Ministers. Section 2 of the London Regional Transport Act 1984 says:
It shall be the general duty of London Regional Transport, in accordance with principles from time to time approved by the Secretary of State",
to provide transport.
The Secretary of State and his hon. Friends are, in effect, dictators for London Regional Transport because Parliament says so. I am not saying that they wish that—they probably do not—but Parliament says so and it is they who are planning the very programme that the hon. Member for Walthamstow advocates.
Page 6 of the business plan, to which the Secretary of State referred, contains an anomaly. It is clear that we are due for another set of objectives. In 1985, the Secretary of State laid down a number of objectives for London Regional Transport, which had to convert them into a strategic plan and had to convert the strategic plan into an annual business plan. One feature of those objectives was that fares should not rise, in general, more than the retail price index. The debate is taking place in the shadow of the 9 per cent., or thereabouts, fare increase earlier this month.
Clearly, the Secretary of State's objectives have been breached. My inquiries show that London Regional Transport's interpretation of that is that it was for three financial years. However, those objectives have not been replaced and in a parliamentary answer the junior Minister

said that those objectives still operate. I suggest that the 9 per cent. increase was made on the instructions, under the London Regional Transport Act 1984, of the Secretary of State, and breached his own objectives. If that is not so, let us hear what happened.
The Secretary of State made it clear at the start of the debate that some of the rate income—about which we have heard today — has been transferred to invest in capital and depreciation provision, but that it will not be spent on revenue support. Those hard-pressed revenue supporters, through the rates, are no longer supporting the next year's revenue—the Secretary of State told us that; they are contributing to depreciation and capital investment. That is wrong in principle and should not be happening; nor should we have had that 9 per cent. increase in fares.
The £92 million, which we heard about a moment ago, is being transferred to the buses. It is clear — the Secretary of State has said so again — that we are approaching bus deregulation in the early 1990s. That means a reversion—again, the Secretary of State said so — to a number of private firms running what, since 1933, has been a single unitary London Transport.
I do not see how that will be done because the whole purpose of public transport by bus, pioneered by the London General Omnibus Company and carried on by London Regional Transport, is that a minority of paying routes pay for those that do not pay. Parts of routes that do pay, pay for the ends that do not. The routes that pay on weekdays or in the middle of the day pay for evening and weekend journeys. That is the principle of public transport as operated in London. How that will be split up either to provide public subsidy for the £92 million taken from the underground—historically, the money used to flow the other way — is a bit of a mystery, because central London provides the bus service. How will that pay for areas such as docklands, Newham and Ilford, and the outer areas, even Walthamstow, if the surpluses are made in central London?
Will the Travelcard facilities be continued? We should be given an assurance on that, because they have been a great boon for people in London, whether travelling on the British Rail Travelcard, the London Regional Transport one or the combined one. It also speeds up the one-man-operated buses that we do not much like. Let us keep the Routemasters as long as we can, because central London is the ideal place for their operation. They should be kept because they speed up traffic and are much better for passengers in central London. It is clear that all this has been planned for some time. British Bus Engineering Limited was closed, as was the centralised bus training depot, which has a worldwide reputation. Indeed, the Minister virtually said that we are to see London Regional Transport split up.
I asked a question not long ago about the proportion of bus routes that paid. At column 532 of Hansard on 18 January, the Minister replied that he did not know, that the information was not available. I find that very hard to believe. London Transport will not cough up the information either. No doubt it has been told not to by the Minister. But it is a sensible and fundamental matter in public transport to transfer surpluses.
There is every indication that 12 to 20 private firms—maybe about 15—will be operating commercially, and there will be the virtual break-up of London Transport as we know it today and as it was created in the 1930–32


Parliaments. The legislation went over two Parliaments, with two Select Committees. It was bipartisan; it was introduced by my former right hon. Friend Lord Morrison under a Labour regime and was completed by a Conservative Government in the early 1930s. We had a consensus, and we had a great civic organisation, which achieved worldwide renown, and which the Government are now about to break up, without being clear about it.
It is coming out bit by bit. When LRT sends us its literature now on organising transport for London we find that the familiar circle and bar symbol has gone. London Buses is to be split up, so London Transport as we know it will no longer exist. This is highly significant, particularly for those who voluntarily gave up publicly owned transport. In my constituency we have the West Ham corporation tram depot that was. There is a depot at East Ham as well, and there are depots at Croydon and Walthamstow. They ran their own trams as well. They gave them up to London Transport because they believed that they would be run in future by the public for the public. Now the Government are to change that. It is wrong in principle, and it should be stopped.
Repairs are being done at many of the garages. When I go around, people come up to me and say, "There is all this work being done at these garages — all these changes." Are they chickens being fattened for pirates who will come and take them in two or three years' time? That is what the operatives say, and it is clearly what the Government have in mind.
Talking about selling off, the Government do not even know what they are doing about that. The Victoria line has been mentioned. It has all the latest electronic equipment in it—it was built for that equipment—but it still cannot work properly. The Northern line is worse. When the extension to Morden in the south, built with public money in the 1920s, was opened the trains ran regularly every four minutes. They do not now. Things have got worse, and it is partly the Government's responsibility. Why have they got worse?
I asked London Transport about that, and it replied that there was a shortage of drivers because they were transferring to the Piccadilly line, which has gone to one-person operation, and it was having to recruit new ones. It had not foreseen the knock-on effect of that administrative change forced on it, required of it, by the Government. One-person operation on the deep tubes is in any case questionable, and that was the result.
I recently asked how many houses had been sold off by London Regional Transport since its creation in 1984. The answer, which appeared at column 532 of volume 125 of Hansard on 18 January, was that the figure was over 800 homes built by London Transport or its predecessors, probably near the depots to enable men and drivers to get there easily and enjoy good housing.
We know from answers that the cost of housing at Morden and on the Northern line is a problem. Those houses have been sold off on the Government's instructions. I do not say that they are all on the Northern line—probably only a few are—but that is an example of what is happening. Many things that are happening on that line are the Government's responsibility. They have brought it not on themselves, but unfortunately on the hapless travellers of London, whom they are asking to pay even more than before.
What about long-term strategy? The Government do not have much of a clue. I asked the Minister recently about the number of people travelling in London by different modes. On 19 January I received the answer, at columns 695–696 of volume 125 of Hansard, that on the underground the figure is now 4 billion passenger miles a year—an increase of 50 per cent. On the buses it is 2·6 billion, a level that has been kept up since 1980. They have done very well to keep that number. On British Rail, the figure is 8.3 billion, an increase of 2 per cent. I also asked how many passenger miles were travelled on the roads of Greater London, and was told that no figures were available. "But", said the Minister in effect, "we think that the number of people travelling on the roads is not much greater than it was in 1980." Tell that to the marines. Any person on London's roads will say that that is not correct.
The Government do not even know the figures, which are vital. If one is constructing a transport policy for a city—all three Ministers have read Select Committee reports and travelled around—one must balance the demand for travel by various modes and the public transport network which provides the basis for that. Give people the option of travelling by private car, facing congestion in certain areas and certain risks, but give them the choice of going by public transport.
The Government do not have a strategy. They are leaving it to chance. We can see that from an answer which I received today. In November 1980, the then chairman of British Rail, Mr. Peter Parker, presented for discussion an imaginative plan called CrossRail — building standard bore tunnels to connect some London terminals from north and south and east and west. The proposal was not put to the Government formally; it was probably done informally. I asked the Minister what consideration had been given to the plan. He said:
The Department did not comment formally on the British Rail document in 1980. No proposals were submitted by the board and it was clear that considerably more work was required to establish the cost and benefits of this project. It would be for it to consider reviving this work in the first instance if it believed that it was a cost-effective way of relieving congestion on rail services.
There is a clue — the concern is with "relieving congestion", not with providing the basic infrastructure of public transport for London which is required.
I do not believe that the Government are discharging their duties to London. The parliamentary answers show it. In breaking up London Regional Transport, which is not perfect — I have criticised it in many respects, whatever Administration were in charge — they are breaking up one of the pioneer public corporations, which had great success and was a world leader. The Government are doing that despite the needs of the London people and their complaints, whether about Dial-A-Ride, the Victoria line or the buses. Therefore, the Government are acting irresponsibly towards London. The most damaging thing that the Government can do is to break up the organisations and contributions made by public enterprise in the last century and throughout this century, particularly by corporations such as Croydon, East Ham, West Ham and Walthamstow that served the people. The Government are not serving the people.

Mr. John Wheeler: It was not my intention to intervene in the debate, but I felt moved to do so having listened to the hon. Member for Newham, South


(Mr. Spearing) and earlier contributions. It is extraordinary that we should have this debate at all. The people least fitted to manage a business called London Regional Transport are politicians, and the sooner it is denationalised and sold into the private sector —whereby the people of London may, if they wish, own the shares of the business — the better. The last thing we should do is have this annual debate. We are not competent to decide how London Regional Transport as a business should be managed, what its levies should be, and where and how it should do its work.
Under its existing management, London Regional Transport is giving a first-class service to the people of London and the millions of people who work in it and come to see it as tourists. The business plan prepared by the chairman and managing directors of the business is ample evidence of that.
Earlier, my right hon. Friend the Secretary of State for Transport referred to the disaster at King's Cross. We do not yet know the reason for the fire. An inquiry is being conducted. I for one would rather wait to hear what those who are conducting it say about the cause and aftermath of the fire. Meanwhile, I am confident, having a number of underground stations in my constituency, that LRT is concerned to the utmost degree with the safety of the passengers using the system. That must be said firmly if the debate is to have any value.
Let me also say a word in conclusion about the improving crime prevention record on the underground. Crime prevention is a matter with which I have concerned myself over the years. Technology, better management techniques, a better use of personnel and the co-ordination of the British Transport police have all reduced crime, and there is now only one assault for every 500,000 passenger journeys.
I welcome the work done to reduce crime on the underground, which I believe is, on the whole, a safe and effective system.

Mr. Harry Cohen: The best thing that can be said of the speech by the hon. Member for Westminster, North (Mr. Wheeler) is that his first point was one of enormous cheek. Some of us sat on the Standing Committee on the London Regional Transport Bill of 1984 which set up LRT. We had arguments with the Minister, of course. His Government stole the democratic control of London Transport from the people of London, which they had held via their local authorities. The Government were forced to pledge a debate at least once a year in the House. This is it: a debate lasting an hour and a half, which is painfully inadequate. Now he wants to take LRT completely away from the people, and give them no say whatever in their own transport system for their own city. That can only be described as enormous cheek.
The order will mean a further decline in London's already severely hard-pressed public transport system. We know the slogan about letting the train take the strain. The Government's philosophy is "Let the passenger take the strain". Because of the pressure on the system, travel is now probably much more stressful for individual Londoners than a day's work. It is certainly more stressful for the housewife who relies absolutely on the system. That is because of the cutbacks that the order will continue.
Revenue support has been run down substantially. I have the figures, which were given to me in a written

answer in December. In 1983, the revenue support per thousand passenger journeys at 1986–87 prices was £124·86. In 1986–87, it has been reduced to £34·75, a quarter of the level at which it was four years earlier. That has had a savage effect, with thousands of redundancies in the service. Waiting times have been made much longer, and the standard of cleanliness has fallen, as was pointed out by the hon. Member for Walthamstow (Mr. Summerson). The cutback in revenue support has reduced it to a level of squalor.
Fares have risen by much more than inflation. Moreover, safety standards have been enormously reduced. One of my constituents nearly fell out of a train at Stratford, because the doors opened during a rush-hour accident, and she was nearly killed. That is only one example of the increase in accidents.
Traffic income — fares — as a proportion of LRT's total income has increased from the 1983 level of 60·15 per cent. to 71·2 per cent. this year. Fare rises are well above inflation this year, with more to come. There is only one way to describe the position: Londoners are paying more for less.
The Government have got away with a trick in the Autumn Statement. They increased the capital for LRT by £500 million and that is very welcome. However, they cut the same amount off the revenue support. The trick is that the £500 million in capital was for one year only but the cut in revenue support is a permanent cut. That trick has been little noticed so far, but it is a scandal.
There has been insufficient investment in capital terms. I will not go through all the correspondence I have received because several of my colleagues wish to speak. However, I have received many letters about the state of the Central line. I sent some correspondence to the Minister about the terrible conditions on the Central line, which my constituents have to use. There is immense overcrowding at places such as Mile End. I wrote to Sir Keith Bright and asked him about the situation and he said that there would be 16 new trains, but that they will be for the Jubilee line. He said that a few may be released to the Central line. I wrote back and asked him how many were to be released to the Central line and he said one. That is one secondhand train. My constituents deserve better than secondhand trains and a second-hand service. I will be pursuing that with the Minister.
I should also like to raise the serious matter of concessionary fares for pensioners in London. The Secretary of State boasted that his plans for deregulation are quite well advanced. I asked him only this week about his plans for concessionary fares for pensioners after deregulation. He said that they had "not yet been made". He said that he would be paying close attention to concessionary fares, but he has not yet given a commitment that they will continue when deregulation comes into play. When he replies to the debate I urge him to give a guarantee to London pensioners that they will have concessionary fares.
This levy order is part of the process of selling London transport short and selling London short.

Mr. Stuart Holland: It has been interesting to hear Conservative Members talking about the case for the privatisation of London transport and asking what we know about London transport and its needs. One thing we do know is what our constituents feel about it and what


they wish us to say in this place. Secondly, at least some of us are aware that on the principle of private profit we simply would not have had parts of London transport in the first place. For example, in the 1960s, when working in the Cabinet Office, I was associated with the evaluation of the economic feasibility of the Victoria line. It was well appreciated that the Victoria line, on any discount rate whatsoever, would make no profit at any time. It was only by taking into account the external benefits imputed to the opening of the Victoria line, including the reduction in the cost of road traffic provisions and signalling, reducing congestion and deaths on the road, and so on, that the decision was taken to invest in the Victoria line.
If London transport is to be split up into lots of private segments, who will get the profit-making ones and who will get the loss-making ones? That point was made by my hon. Friend the Member for Newham, South (Mr. Spearing). It simply does not make sense, as has been illustrated by my hon. Friend on the surplus being generated during the day rather than at the end of the day and in central London rather than peripheral London, to go for a privatisation formula. I quote an authority as radical as Adam Smith who said that nothing is more certain when two or three producers are gathered together
even for merriment and diversion
than that they will seek to conspire against the public interest by
contrivance to raise prices.
That is what we will see. Prices will be raised in order to pay profits to shareholders, many of whom will not be using the service. It is a disgrace that the Government are even considering it.

Mr. Spearing: Does my hon. Friend realise that the bus services that are let out to the private sector may pay a modest, or even a big, profit to those who run them now, but only because they are paid a subsidy by LRT for the unsocial routes?

Mr. Holland: My hon. Friend has raised an important point.
The hon. Member for Christchurch (Mr. Adley) fluently described the consequences of private bus operators in central London. I raised this matter in connection with Channel tunnel traffic coming out of Waterloo station. Where is the integrated planning by British Rail and London Underground in relation to traffic use there? There will probably be an additional 4 million vehicles a year. I do not know how many of my hon. Friends have recently tried to take a quick cut on the other side of the river between the roundabout at the far end of Westminster bridge and Waterloo at peak passenger times. What provision is to be made for private tour operators? There has been no forward planning for additional traffic from the Channel tunnel outlet because it is assumed that there is sufficient spare capacity to accommodate it. Tell that to my constituents; they will not believe it. That is why we need these debates and why Ministers must address these issues much more seriously than they do now. We need integrated road-rail planning, not the disintegration of road-rail transport that would flow from private ownership.

Mr. Nicholas Bennett: What happened in the 1960s?

Mr. Holland: The hon. Gentleman intervenes from a sedentary position. In the 1960s forward planning led to considerable success—for example, the Victoria line—[Interruption.] Would the hon. Gentleman like to get to his feet and tell me whether he would have preferred the Victoria line not to be built? The hon. Gentleman does not take up my invitation; that is very interesting. I am sure that those who use the Victoria line will note that point.
On the question of the OPOs, London Transport told us this morning that access to those vehicles is easier for certain categories of person, but the point that was stressed to me by the Lambeth public transport group is that many categories of persons will be unable to use those vehicles because they are less secure for them, or they feel less secure on them. The estimate is that householders would prefer not to use them. The Government say in other contexts that they are concerned about the interests of the consumers. If they are concerned about these consumers, they ought to be listening to their voices rather than simply supporting LRT by pushing through OPOs.

Mr. Jeremy Corbyn: This debate is a travesty. Very few hon. Members are present for this debate, which is being held late at night. That is what passes for democracy for the people of London. As my hon. Friend the Member for Leyton (Mr. Cohen) explained, London Regional Transport was taken away from any form of democratic control.
I am very worried about this order. It demonstrates exactly the direction in which the Government wish to go with London Regional Transport. The levy order includes an estimated grant of £190 million for LRT—the lowest public transport subsidy of any capital city in western Europe and of many cities in the United States. That is why there is to be a 10 per cent. fare rise, why trains and buses are dangerously overcrowded and why safety has been reduced.
We should be discussing the travel needs and priorities of the people of London. Last year was horrendous for many people in London. The King's Cross fire was a disaster. It was, by any stretch of the imagination, terrible, but it was not an isolated incident. Many other accidents and incidents occurred on the London underground network last year. If one cuts back on staff to the extent that London Transport has done, at some point safety must obviously be put seriously at risk.
The Government have not heaped all the horrors of bus deregulation on London, although I understand that many Conservative Members want that to happen. They want us to return to the dangers of the 1930s and before, when there were races between buses in an effort to get to the bus stop first. The hon. Member for Christchurch (Mr. Adley) outlined what is happening in Dorset. There can be no doubt that what is happening there will happen in London if bus deregulation is introduced here.
I ask the Minister to look seriously at what the traffic commissioners and others are doing to check the safety of buses on the routes that are being sold off, the training that is being given to the drivers and the medical condition of some of those bus drivers. I say that as one who is genuinely concerned about the safety of passengers and not by way of criticism of the drivers.
The Government's record is one of producing unremitting disaster for those who have worked for and given their lives to LRT. The morale of the staff is


extremely low, and that is hardly surprising when 5,000 underground workers have lost their jobs, along with 3,000 bus workers and many members of the ancillary grades. Many of those who have not lost their jobs have been told that they will face the rigours of private competition. Against that background, it is hardly surprising that lifts and escalators are out of action for so long. The organisation involved is a private company that is not even based in London. A perfectly adequate maintenance service was provided by London Transport before the advent of this form of privatisation.
We are spending nationally £190 million on LRT, and 65 per cent. of that sum is provided by London ratepayers. The comparative benefits of spending another £200 million on London Transport would be marvellous. There would be cheaper fares, better services, better buses and less congestion on the roads. A better public transport system would take many private motorists off the roads. Unfortunately, a Government who are obsessed with providing tax concessions for company cars and spending money on road building will not contemplate that approach. London Regional Transport has been provided with a subsidy of £190 million while the cost of two and a half miles of road to Canary Wharf will be over £200 million.
I ask the Government to observe a sense of priorities. Let them cut major road building in London and invest the moneys thereby saved in public transport. That is the way to reduce congestion — improve safety and improve services for the travelling public.
We want to see the restoration of planning in London. We are suffering the reality of a nightmare — the implementation of privatisation, speculation and the destruction of all that is good about London. This is the consequence of the destruction of the Greater London council and the curtailment of planning powers within the boroughs. I want to see a democratically controlled public transport system in London, including the British Rail network within the Greater London area. We must have the sensible, planned public transport network that the capital so desperately needs.

Mr. Channon: I have listened to the debate with close attention and I shall try to answer as many questions as I can in the brief period that is left for me. If I fail to answer any questions now, I shall write to hon. Members or ensure that London Regional Transport responds directly.
First, I make clear to the hon. Member for Islington, North (Mr. Corbyn) that I intend to improve both the road and rail systems in London. It is not a matter of either/or. I intend to have a large road improvement programme in London and a considerable investment in LRT. I am sure that that is what the majority of citizens in London wish to see.
It cannot be said that LRT is perfect or that it cannot be improved. No one is complacent. Having heard some of the comments made this evening, no one would think that I have announced a large reduction in what the ratepayers of London have to spend on LRT. There will be a reduction of 20 per cent. on last year's spending by the ratepayer, and that will be accompanied by a large increase in investment in LRT.
My hon. Friend the Member for Westminster, North (Mr. Wheeler) rightly drew attention to the problem of crime, and I acknowledge that there is still far too much

crime on the underground. However, there is only one assault for every 500,000 passenger journeys. Of course, any crime within the underground system is unacceptable, but the rate here is better than in many other countries. About £15 million has been made available over three years to follow up reported crime on the underground.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) talked about one-person operated buses. Accidents are extremely rare and records show that door-buses are four times safer than open-platform buses. There are fewer instances of crime within door-buses, and the drivers are twice to four times safer than the conductors on open-platform buses. There has been a 25 per cent. reduction in assaults.

Mr. Holland: What about accidents to children?

Mr. Channon: Of course, any accident is one too many. But the figures show that there are fewer accidents on those buses than on the ones to which hon. Members wish to return. There is no proposal to go for 100 per cent. one-person-operated buses in London. Someone said that we were rushing to increase the number, but there will be only a modest increase next year.
I thought that my hon. Friend the Member for Walthamstow (Mr. Summerson) made a somewhat understated speech. We shall invest a great deal in the London underground to resolve some of the problems about which he and his constituents are worried. He drew attention to the Angel, Islington, which is a very overcrowded station. That is why vast sums of public money—about £20 million—will be spent to improve conditions there. Similar sums will be spent at other underground stations.
Several hon. Members mentioned fares. Despite the 1988 increase, fares on London Regional Transport are lower in real terms today than they were eight years ago, at a time when London wages have increased by 35 or 40 per cent. As a proportion of earnings, LRT fares are much lower than they were a few years ago. Some hon. Members have given a false impression of fares.
I was astonished that the hon. Member for Stretford (Mr. Lloyd) mentioned investment. Next year, we shall invest £365 million in London Regional Transport, compared with £193 million in 1984. In real terms, the figure is up by well over 50 per cent. Indeed, investment in real terms has increased every year since the Government took over responsibility from the GLC. So much for the nonsense talked by some hon. Members about the golden days of the GLC before my hon. Friend the Minister of State and I—whom the hon. Member for Newham, South (Mr. Spearing), colourfully but inaccurately, called the dictators of London Regional Transport—took over. Investment is one third higher in real terms since 1984–85, and we have planned a further increase of 19 per cent. in real terms for next year. The elimination of the need for revenue support has released funds for capital investment, enabling investment to be increased while the burden on taxpayers and ratepayers is reduced.
If we are to achieve a better service for Londoners, we must invest in the capital expenditure on London underground, which has been necessitated by the massive increase in passengers during the past few years. Under the policies pursued in the past, public money was spent on keeping down fares and very little capital was spent on improving services.

Mr. Holland: It was generating revenue.

Mr. Channon: The hon. Gentleman knows — I am amazed that he challenges me on it — that this Government's record on investment in London Regional Transport is the best ever. We inherited a system starved of investment, and we have increased it enormously.
The 1988–89 figures for Dial-a-Ride are £6·25 million, not £5 million, as the hon. Member for Southwark and Bermondsey said. That is an inflation-matching increase over the current year and a 40 per cent. real increase over the last GLC year. I know of no threat to Dial-a-Ride, which is an extremely important service.
I reassure the hon. Member for Newham, South that there is no reason why Travelcards should not be retained after deregulation. There is no reason why prepaid tickets, including multi-operator cards organised by LRT, should not continue. Hon. Members need have no worry about concessionary fares, as I shall make clear when I make a full statement about our proposals for deregulation.
The hon. Member for Stretford said that it was nonsense to fund capital from revenue. No business man would agree with that. After depreciation and renewals expenditure, LRT is a long way from making a surplus. London Regional Transport is short by some £175 million. Indeed, the hon. Member for Stretford stated that the Paris Metro carried more people than the underground system in London. Yes, that is true. However, the Paris Metro carries more people but for far shorter distances. The average passenger miles per year are higher in London than in Paris. The analogy drawn by the hon. Member for Stretford is wholly incorrect.
I will study the points that have been made in the debate. We are setting LRT on course so that it will have more investment. Over the next few years we shall be able to provide a better service for Londoners and for hon. Members' constituents, whether they travel by bus or underground. We will do that at a time when fares are lower than they were eight years ago. I ask the House to approve the order.

It being one and a half hours after the commencement of proceedings on the Motion. MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 (Exempted Business).

Question agreed to.

Resolved,
That the draft London Regional Transport (Levy) Order 1988, which was laid before this House on 11th January, be approved.

PETITION

Rating Reform

Mr. John Home Robertson: I come to the House this evening to present a petition from the convenor and members of East Lothian district council calling on the House to repeal the legislation under which the Government propose to impose a poll tax in Scotland, which is likely to be set at £361 per head for the people of East Lothian regardless of whether they live in a hostel or a castle.
The people in every part of my constituency are making it clear that they object to the grossly unjust principle of the poll tax. It is both important and significant that our elected council is one of many Scottish local authorities that have resolved not to co-operate with the imposition of such a primitive and arbitrary system of taxation on the people of Scotland.
I strongly support the appeal from the members of East Lothian district council to the House to repeal this oppressive and offensive legislation.
To lie upon the Table.

Deep Mining (East Fife)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Lloyd.]

Dr. Lewis Moonie: Just over six months ago, in my maiden speech to the House, I described the coal industry in my constituency. I little thought that I would come to the House tonight to give its epitaph.
My constituency stands on layer upon layer of coal, which extends down more than a mile beneath the surface. Coal has been mined there for centuries—that is, until two weeks ago, when the tradition ended. British Coal announced the closure of Seafield colliery because of low production and heavy losses and it managed to buy the acquiescence of the work force through short-term bribes that it has instituted to persuade men to take early retirement and redundancies.
Why was Seafield colliery closed? Was it exhausted? No. Estimates suggest that there are more than 200 million tonnes of coal left in the measures that I am discussing tonight. Is it poor quality coal? No, it is not. It has the highest calorific value of any coal mine in the United Kingdom. It is low in sulphur and chlorine. It is a high-value product when we consider that domestic coal in this country sells at more than £100 a tonne retail. That is the quality of the coal that we are talking about. Are conditions difficult in the pit? Yes, they are. However, I wonder whether they were difficult enough to force its closure.
There are problems of combustibility with the coal, which have led to a loss of faces because of fires. There are also problems of steep gradients. Steep seam working is difficult. Seafield colliery has been the leader in this country in steep seam working involving gradients up to 1:1·5. Working gradients on that scale must be seen to be believed, particularly when the machine comes down the face stripping off three feet of coal at a time. Seafield has been a model for other areas. We could continue to learn from that pit about the use of that type of technology which we will need in future. British Coal often refers to averages. It refers to average cost and it averages out its losses. We are not talking about an average pit producing average coal at Seafield.
Was the problem industrial unrest? Last year, the work force of the pit gave up their Christmas break to fight a fire. The pit had a tradition of good labour relations. They were soured occasionally, I admit, by certain factors, but they were basically sound. Therefore, what was the reason for the closure?
The fault lies firmly at the door of British Coal and, to some extent, the Government. There is a poor investment record at Seafield. There has been a failure to invest in the modern equipment that the pit deserves. It can take over one third of a man's shift to get down to and up from his workplace. When a man is travelling down to and up from the coal face, he cannot cut coal. One of the problems was a lack of investment in belts for transporting coal out and for transporting men in. Belts were old-fashioned and in need of renewal. There were constant breakdowns in man-riding belts and in coal-carrying belts. When that happens, with no storage space underground, the line comes to a halt. That has been one of the main problems of low production over the past six months.
The other problem is the fact that there is only one working face at the pit. Again, it is all or nothing. If the face is working and everything is going well, coal is produced at a decent rate. If not — there have been many stoppages—production levels rapidly fall. In turn, that has led to a fall in the morale of the work force. It is particularly due to the fact that, last year, British Coal promised new investment in the pit. That promise was not fulfilled.
There has been a lack of sophistication in British Coal's management. It has good managers when it comes to producing coal. There is no doubt about that. They are engineers — they know their jobs — but they are poor handlers of men. Man management and personnel relations have been a failure. For example, last year, after the fire, British Coal paid off many underground technicians, skilled workers, electricians, and so on. The next thing we know is that it is bringing in private contractors to do the job, at two or three times the wages of the miners who were paid off. Oddly enough, the miners found out about it. That was scarcely conducive to good relations in the pit thereafter. Quite frankly, it is incredible that a company could act in that way.
The most important factor in the closure of Seafield is British Coal's failure to develop the new long-term markets that it needs for its product, particularly a product of such quality. It has failed to look abroad to places such as Scandinavia and other areas in which people are trying low-sulphur, good-quality coal to burn and avoid the pollution problems with which we are so familiar.
British Coal's marketing policy has left a great deal to be desired. It has spent the past three or four decades in the pockets of two consumers, the South of Scotland Electricity Board and the Central Electricity Generating Board. It has been quite content to sit back, accept their markets and not go out and look for the alternatives for which it should have looked. That is fine when electricity use is expanding and when buyers will take all the coal that British Coal produces, but it is no good when electricity consumption stops rising at the expected rate. Suddenly, we find a captive seller who is forced to sell at the price that the consumer wants. That possibility should have been foreseen, and the market should have been diversified.
There is also the Government's attitude to dependence on nuclear power. That is a mortgage on our future. We still do not know how we shall dispose of the ruins of the power stations that we shall close over the next 10 years. We still do not know what we shall do with nuclear waste. Yet we are expanding our use of technology that has been stopped in the United States of America. We are starting to introduce the self-same power plants that the United States has banned, to the cost of our indigenous coal industry, and the pit in my constituency in particular.
So I believe that the Government have had a role to play in this situation. But which Scottish Minister has shown any interest in the Scottish coalfields over the past few years? None of them. They do not discuss the subject at all. They say that it is the Department of Energy's problem and nothing to do with them. The fact that the coalfield is part of their country means nothing to them. They have no interest whatsoever. Can no one in the Government, or in British Coal for that matter, see the need to maintain the type of technology that we have developed in these pits, steep seam technology — so


important, yet just thrown away? Can no one see that the quality of the coal that is being abandoned is such that we cannot afford to lose it?
The result is quite simple: 4,500 jobs have been lost in the Fife coalfield since 1983, and another 650 jobs were lost two weeks ago. We have a young work force—average age, 33—with no hope of re-employment in an area where male unemployment is well over 20 per cent. There will be more job losses in the workshops in Cowdenbeath; there will be a knock-on effect on local business and suppliers, who will also be hard hit; there are diminished prospects for school leavers and for the excellent courses at the local technical college on mining engineering. We see all the usual stories of missed opportunities, of failure—everything thrown away.
What does British Coal think it is doing? I do not know. There have been precious few statements nationally about the problem. Are they quarrelling over the succession to Sir Robert Haslam, perhaps? Who knows? They are certainly not talking about Seafield. What is the Secretary of State for Energy doing? He is racking his brains over how to privatise electricity in the way that the Government want, keeping Lord Marshall off their backs at the same time mutually incompatible objectives, I fear, as can be seen from the worried expressions on the faces of certain Ministers in the Department of Energy.
From my criticism of British Coal, I exclude Mr. George McAlpine, its manager in Scotland, because the tragedy is that British Coal in Scotland now has a manager with vigour and vision, the manager it needs to lead the industry into the 1990s, while nationally we see the management hellbent on closing down the Scottish coalfield. I believe that we will see the end of deep mining in Scotland in the next five years. That is our future under British Coal. When Torness comes fully on stream, while there are still signs of low prices for the oil and gas used in other power stations, when there are these alternatives, when there will be a low, and falling, demand for coal from the South of Scotland Electricity Board, then British Coal will reduce its operations in Scotland, reduce its peripheral operations elsewhere in the United Kingdom, and end up by concentrating production on a few pits in the midlands, in Yorkshire and in Leicestershire.
This is not necessary. British Coal has made promises—well, one could almost call them promises—about the future of mining in Kirkcaldy. It says that it would like to mine the Dysart Main seam where there is 100 million tonnes of coal–40 years' output — and other seams below that. It has promised to consider investment, and I understand that it will begin prospecting near the Frances colliery site to the north of Seafield in April, with a view to a phased development, looking initially at opencast and later, so it says, at putting in a drift mine to take the deep coal out. Looking at the record of British Coal, we can be pretty sure that we will get the opencast, if it can get planning permission for it, but I would not like to stake my future on getting a deep mine at the end of it.

Mr. Alexander Eadie: My hon. Friend makes a powerful case. As he well knows, I worked those seams in the east Fife coalfield for 30 years at the coalface—my father was killed in a pit in that area. But on the point that he makes about the reserves of coal in that area, will he agree with me that we are talking about an area

which is the largest proved coalfield in the whole of the United Kingdom, that it covers between 104 and 110 square miles, that there are seams outcropping to about 100 ft? Will he agree that it is absolutely monstrous to think about opencasting there? Opencast is a physical impossibility. Does my hon. Friend think that, with regard to the case that he is advancing, the Minister must give a positive reply about investment in this gigantic coalfield? Not to develop it would be a form of vandalism and a scandal for the people of Scotland.

Dr. Moonie: I entirely accept what my hon. Friend says. It is the largest coalfield in Britain, and the seam that I am talking about is only one of several that can be mined there. Other seams below it can be reached using modern technology. There are others below that which admittedly would be more difficult. We are talking about an enormous coalfield and we must receive some guarantees about its future.
I do not know how feasible British Coal's proposals for opencast mining are. It obviously considers it worth while to explore the possibility — opencast mining is a very profitable operation for it. However, it can be a threat to deep mining in Scotland, not an adjunct.
British Coal wants several conditions satisfied before it proceeds with its investment. It wants planning permission, but that would be fairly simple to obtain, provided guarantees are given about the future of deep mining. It wants guarantees on flexible working. There is no way that I or any other politician can give those; that is a matter for the NUM. There were signs from the local work force that, for the sake of their pit, they were prepared to work almost any hours requested of them.
British Coal wants opencast mining first. What guarantees do we have that there will be anything afterwards? It could be opencast first and last, and in five or six years we would have nothing but a dirty hole to the west of our town, which would, we hope, be reinstated.
British Coal wants guarantees about long-term markets. I thought it was the job of British Coal and the Government to secure long-term markets. What is being done? Can the Minister give any assurances that long-term markets are being sought to sell the product that the industry is producing? It is not much to ask for the Scottish Office, the Department of Energy, the DTI — the Department of enterprise, as it is known — to get together on a project such as this in which 1,000 jobs and an investment of £150 million are involved. If a Japanese company were involved, those Departments would be falling over themselves to be involved. What is wrong with doing it for the coalfield? Can guarantees be given to consumers that long-term supplies will be made available? Can finance be sought from the EEC?
Those questions must be answered, because the people of Fife and my constituency are sick and tired of empty promises. They want action, decisions and investment in our future.

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer): I begin by paying a sincere tribute to the hon. Member for Kirkcaldy (Dr. Moonie) and his hon. Friend the Member for Midlothian (Mr. Eadie) for their efforts in raising the future of deep mining in east Fife. Last month, they met my right hon. Friend the Secretary of State for Energy and registered a number of


points—some of which have been repeated tonight—with him. As promised, my right hon. Friend raised those matters with British Coal. As the hon. Member for Kirkcaldy recognised, they fall within the management responsibility of British Coal. However, 1 should like to put the issues under discussion in perspective and then confirm one or two points that the hon. Gentleman has raised.
The east Fife coalfield, which straddles the town of Kirkcaldy, has been worked for over 100 years, as was mentioned by the hon. Member for Midlothian. The Frances pit, which at one time was Scotland's oldest working unit, was connected underground with the nearby Seafield colliery in March 1980. Both Frances and Seafield were exploiting undersea reserves, and working Britain's most consistently steep seams, with gradients as great as 1 in 1.2. Mining conditions have proved extremely difficult, with some seams, I understand, particularly prone to heating. During the long and pointless miners strike of 1984–85, both units were badly affected by underground fire, and its two main faces were lost, D51 at Frances and LO1 at Seafield. It was one of those fires which caused the Frances end of the unit to be closed down, and production resumed after the strike in two faces at the Seafield end.
British Coal recognised the potential of the unit and, contrary to the impression given by the hon. Member for Kirkcaldy, invested over £8 million in replacement faces, and the unit was well on its way to producing its target of four tonnes per manshift, which would have been an acceptable survival level. I have to say that the efforts were not helped by a series of local disputes.
However, production was nearing its target, and the future of the unit seemed to be safe. But over the Christmas and new year holidays just over a year ago there was another tremendous fire which resulted in the loss of the major production face, L15. The work force rallied round magnificently, working round the clock over the Christmas and new year holidays, to contain that fire. It was successful in saving one face. It is that face, D19, which has been worked over the past 12 months.
The area director, Mr. George McAlpine, to whom the hon. Gentleman advisedly paid tribute, said just over a year ago that in order for the pit to remain viable, a reduction in the work force was necessary. The local unions recognised this and accepted that decision. The agreed target, or four tonnes output per manshift, was reached for the first time in April 1987. Mr. McAlpine said at that time that on the basis of that level of production he was prepared to agree in principle to the development of a new face at an estimated cost of £10 million.
Unfortunately, further setbacks occurred. During September the men walked out in dispute over dust levels brought about by efforts to control a further heating underground, and there was a significant loss of production. Sixteen days later the unit was brought to another standstill by a further dispute. A coal shearer broke down, and members of the union responsible for repairing it, the Scottish Colliery Enginemen, Boilermen and Tradesmen's Association, refused to repair it, wrongly claiming that such action would constitute a breach of the national overtime ban, and losing even more production. In addition, the national overtime ban cost Seafield over £1 million in lost production.
All of these factors, combined with what everyone recognises were difficult mining conditions, meant that the

unit was operating well below its target — only two tonnes output per manshift and not the required four. The unit was facing a loss of £11 million for this financial year, and was causing a drain on the rest of the coal industry in Scotland. At a colliery review meeting at the end of November, Mr. McAlpine told the unions that the situation at Seafield was now extremely serious and that there was no justification for continuation unless costs could be reduced substantially, and the production targets met. The unit was to be given a final chance. It was agreed to hold a reconvened meeting on 11 January. Operating performance did not improve, and on 11 January the area director proposed that Seafield should close. That proposal was agreed by the majority of the unions involved, and production actually ceased at Seafield last Friday.
As well as promising that there would be no compulsory redundancies arising out of the closure, and that transfers would be available for those wishing to remain in the industry, Mr. McAlpine promised that a substantial amount of money—some £750,000—would be available for exploratory work to assess the viability of mining the substantial reserves north of Seafield which could be accessed from a possibly reopened Frances colliery.
The Government have made and are making substantial amounts available for investment by British Coal — more than £2 million every working day and more than £5·5 billion since 1979. However, the question of further investment at a particular colliery is one for British Coal management. To take a decision about Frances, British Coal must first be sure that there is a firm market for the coal—as the hon. Member for Kirkcaldy recognised at the price at which it can be produced—and it will need to look closely at the future markets for the coal in electricity generation and other industrial markets. It will also need to compare this project with other possibilities.
Secondly — the hon. Gentleman referred to this —flexible working would have to be agreed by all unions concerned. As Sir Robert Haslam said less than a fortnight ago, flexible working is vital to the industry if it is to survive against fierce competition and expand the market for coal, and it is the only way to create more jobs and secure those already existing in the industry. Thirdly, I understand that the project would need to obtain planning permission in the usual way from the local authorities, and that is not in dispute.

Mr. Eadie: The hon. Gentleman is presenting a proposition to the House based on three assertions. The first concerns the availability of saleable coal—a new feature of the Government's case. Here we have a coalfield that is like a gold mine, yet the Government question whether the coal can be sold. Does the Minister agree that the second assertion then falls flat on its face? Six-day working will not solve anything if British Coal does not try to find a market for the coal that is produced. That places the men in the area in an impossible position. I wonder whether the Minister would reflect on that.

Mr. Spicer: The hon. Gentleman, who is extremely experienced and well versed in these matters, will know that the market depends upon the price at which one is selling — particularly in the context of present world prices. Of course, the cost of coal, and therefore the price


that British coal fetches, is crucial in determining whether there will be a market. We have made no bones about that. We have never tried to disguise the fact that once the electricity supply industry is privatised it will be free to purchase coal where it wishes. We hold the firm view that British Coal has the capacity and the capability to compete against all-comers. We agree with the hon. Gentleman that we have superb reserves and a superb capability for producing coal. There is nothing between the hon. Gentleman and us on that. The only thing that we say is that we must exploit the coal so as to make it competitive. That will create the markets that we require.
I should also draw the attention of the House —[Interruption.] I must say that we are honoured by the presence of a very high-powered team of Opposition Members, considering that it is so late at night. [HON. MEMBERS: "It is important."] I quite agree. I should draw the attention of the House to the measures being taken by British Coal to mitigate the effects of the closure in the constituency of the hon. Member for Kirkcaldy. Starting today, all 638 men on the colliery's books will be interviewed to determine how many wish to transfer to other units in Scotland. Those seeking redundancy will enjoy the generous terms available under British Coal's own arrangements.
Including the £5,000 supplementary lump sum, the redundancy benefits to younger miners with limited service are even greater than those available under the redundant mineworkers' payments scheme—something that is not generally recognised. For those with longer service, total lump sums of up to almost £40,000 are available, including statutory lump sums and cash in lieu of concessionary fuel.
Under section 3 of the Coal Industry Act 1987, the Government are providing 75 per cent. grant aid towards those redundancy costs, as well as towards the transfer costs of those who choose to take another job in the industry. I understand that British Coal expects to be able to offer alternative jobs locally to those who do not wish to take redundancy.
As both my right hon. Friend and I have made clear, the decisions which will decide the future of deep mining in east Fife are ultimately ones for the British Coal corporation. However, to a very large extent they will rest on the existence of dependable markets and a realistic attitude on the part of the work force.
In conclusion, as the Minister responsible for this issue, I hope that Opposition Members who have great influence in these matters, and many of whom have close connections with the unions concerned, will play their part in ensuring, in the interests of British Coal, and indeed of the country—forgetting party politics—[Interruption.] No, it is in the interests of British Coal that we forget politics and get down to considering how best to put the industry back on it feet.
This debate, which the hon. Member for Kirkcaldy has raised astutely — in the context not just of his constituency, but of the industry as a whole—sharply pinpoints the choices that lie ahead. Either the industry is run down or, if we get the industry and the working practices right, it can be put back on its feet. I very much welcome the debate and hope that it will result in a positive outcome in his part of the world.
Question put and agreed to.
Adjourned accordingly at sixteen minutes past Twelve o'clock.